China News Agency, Seoul, January 13 (Reporter Liu Xu) On the 13th local time, the Bank of Korea (the central bank) announced that it would raise the benchmark interest rate by 25 basis points to 3.5%.
The Bank of Korea issued a statement on the 13th, saying that due to factors such as the slowdown in world economic growth and rising interest rates in many countries, South Korea’s economic growth momentum will weaken. It is expected that the economic growth rate this year will be lower than the 1.7% predicted in November last year.
The inflation rate will remain around 5% in the short term, and the annual inflation rate is expected to be around 3.6% this year, consistent with the forecast in November last year.
The Bank of Korea stated that whether the benchmark interest rate will continue to increase in the future will depend on factors such as economic downside risks, financial stability, the impact of interest rate increases, the degree of inflation slowdown, and changes in monetary policies of major countries.
Yonhap News Agency analyzed that the central bank raised interest rates again mainly due to factors such as the fact that prices have not been stabilized and the interest rate gap between South Korea and the United States has widened. Factors such as whether the Fed narrowed its interest rate hike in early February.
In March and May 2020, due to the negative impact of the new crown epidemic on the economy, the Bank of Korea cut interest rates by 50 and 25 basis points respectively. After that, the benchmark interest rate was frozen for 9 consecutive times and remained at 0.5%.
In August 2021, the Bank of Korea raised the benchmark interest rate from 0.5% to 0.75%, ending 15 consecutive months of loose monetary policy with the lowest benchmark interest rate in history, and raised it to 1% in November of the same year.
In January, April, May, July, August, October and November last year, the Bank of Korea raised interest rates consecutively, raising the interest rate to 3.25%.
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