SEOUL, July 16, (v7n)– South Korea's central bank raised its benchmark interest rate by 25 basis points on Thursday, marking the first hike in more than three years as policymakers confront persistent inflation, a weaker won, and robust economic growth.
The Bank of Korea (BOK) convened a Monetary Policy Board meeting and "raised the benchmark rate from 2.5 percent to 2.75 percent," a BOK official told AFP.
Since May, the BOK has increasingly leaned toward tighter monetary policy, pointing to stubborn inflation, a weaker currency, and an economy buoyed by the country's strong semiconductor exports. The combination of robust growth, rising home prices, and elevated household debt has strengthened the case for policy normalisation.
South Korea's economy expanded at its fastest pace in nearly six years in the first quarter, while BOK Governor Shin Hyun-song said inflation was likely to stay above the central bank's target for a considerable period. Consumer prices climbed 3.2 percent in June from a year earlier, partly due to higher energy costs and supply chain disruptions linked to conflict in the Middle East.
Thursday's increase was the first since January 2023, when the central bank lifted its policy rate to 3.5 percent during its post-pandemic normalisation cycle.
END/WD/RH
