The Monetary Policy Board (MPB) of the Bank of Korea has raised the Base Rate by 25 basis points, from 3.25% to 3.50%, to reflect the current economic conditions of slowing growth and high inflation.
The Board cited the slowdown in the global economy as the reason for raising interest rates, highlighting high inflation and consequent hikes in key rates in major countries affecting growth.
The Bank of Korea judged that South Korea’s economy continued to slow. GDP growth was expected to fall below the November forecast of 1.7%, and consumer price inflation remained high at 5% in December.
Despite measures taken by the South Korean government and the Bank of Korea to stabilize the domestic financial and foreign exchange markets, the Bank of Korea assessed that credit risk aversion remains high due to concerns about the slump in the real estate market.
In its announcement, MPB shared its plans to closely monitor economic development and adjust policy to support sustainable economic growth and price stability.