Updated
Updated · 매일경제 · Jul 8
Bank of Korea Seen Raising Rate 0.25 Point as Inflation and Won Pressures Build
Updated
Updated · 매일경제 · Jul 8

Bank of Korea Seen Raising Rate 0.25 Point as Inflation and Won Pressures Build

3 articles · Updated · 매일경제 · Jul 8

Summary

  • A 0.25-percentage-point hike is the most likely outcome at the Bank of Korea's next policy meeting, with experts saying a hold would jar markets after Governor Shin repeatedly signaled tighter policy.
  • Inflation expectations, a stronger GDP outlook, and the won's weakness are driving that view, while exchange-rate pressure and real-estate risks are seen as key burdens for policymakers.
  • Even at a 2.5% benchmark rate, former officials and academics said rising inflation expectations could lower the real rate, leaving room for one or two further increases toward a neutral level.
  • The committee is still expected to keep a hawkish tone even if it moves only gradually, while pairing any hike with calls for separate support for small businesses and vulnerable borrowers.

Insights

As Korea fights inflation, is its hawkish monetary policy worsening its demographic winter?
With a chip boom fueling growth, why must Korea's rate hikes punish its indebted households?
Can Korea's digital currency project solve inflation without the pain of traditional rate hikes?