Economic Buzz: South Korea Raises Key Rate By 50Bps

14 Jul 2022 , 12:36 PM

The Bank of Korea raised its key interest rate by a record half percentage point as policymakers prioritized curbing the spread of inflation expectations amid high downside risks to the economy. The Monetary Policy Board of the Bank of Korea decided to raise the Base Rate by 50 basis points to 2.25 percent from 1.75 percent. This was the first time that the BoK has increased the rate by 50 basis points in its history. The bank has raised the interest rate by 175 basis points in the current tightening cycle that began in August 2021. In June, consumer price inflation rose to 6.0 percent. The central bank forecast inflation to remain high at above 6 percent for some time and run substantially above the May forecast of 4.5 percent for the year overall. GDP growth is projected to be somewhat below the May forecast of 2.7 percent this year, dampened by the slowdown in exports amid weak economic growth among major countries.Powered by Commodity Insights