South Korea’s central bank stated that it will maintain its hawkish stance on interest rate hikes in the future

Odaily Planet Daily News The Monetary Policy Committee of the Bank of Korea stated on the 28th that it will continue to maintain a stance on interest rate hikes in the future, comprehensively considering inflation and financial stability factors. The Bank of Korea previously announced its first interest rate hike in three and a half years. The committee explained the background of this rate hike, stating: “As economic growth strengthens driven by exports and investment, inflation is expected to remain above target levels for a considerable period, and risks to financial stability also persist.” The committee predicted that “supported by a strong semiconductor cycle, exports and investment will continue to maintain high growth. As improving income conditions drive the recovery and expansion of consumption, the economy is expected to maintain solid growth. This year’s economic growth rate is expected to be significantly higher than the May forecast of 2.6%.”

Regarding prices, the committee predicted that inflation will remain high for a considerable period. The committee also assessed that the volatility of the Korean won against the US dollar has increased, and the simultaneous increase in housing-related loans and other loans has led to a significant rise in household loans. The upward trend in housing prices in the Seoul metropolitan area has also further expanded. Considering the above factors, the committee stated, “It is currently judged necessary to continue maintaining a stance on monetary policy interest rate hikes.” (Jin Shi)