On the 26th, the central bank of South Korea decided to raise the policy interest rate by 0.25% because of concerns about rising prices such as soaring real estate prices.
The rate hike for the first time in 2 years and 9 months will lead to a shift to monetary tightening.
The Bank of Korea, the central bank, held a monetary policy meeting on the 26th and decided to raise the policy interest rate by 0.25% to 0.75% a year.
It has been two years and nine months since November 2018, and after the spread of the new coronavirus infection, we have been cutting interest rates one after another to support the economy, but this time we will turn to monetary tightening.
Regarding the reasons for the rate hike, the Bank of Korea cites that while the economy is on a recovery trend, there are growing concerns about rising prices, and that household debt is increasing due to soaring real estate prices.
Bank of Korea Governor Lee Ju-yeol said at a press conference, "Although the re-spread of infection has had a negative impact on consumption, it does not prevent the economy from recovering. Interest rate hikes are normalizing monetary policy. It's our first step to try. "
The Korean media said, "Because we decided that the side effects of monetary easing, such as soaring real estate prices against the backdrop of low interest rates, could not be left unattended," and responded to rising prices while maintaining the economic recovery trend. It seems that difficult steering will continue.