Central bank increases rates by a quarter point to 1.75 percent

Home > Business > Finance

print dictionary print

Central bank increases rates by a quarter point to 1.75 percent

Bank of Korea Governor Rhee Chang-yong at the monetary policy board meeting held in central Seoul on Thursday. [BOK]

Bank of Korea Governor Rhee Chang-yong at the monetary policy board meeting held in central Seoul on Thursday. [BOK]

 
The Bank of Korea raised the base interest rate by 0.25 percentage points to 1.75 percent, the central bank announced Thursday.
 
It is the second consecutive rate increase and was forecast by most analysts. The board unanimously agreed to raise the rate by 25 basis points last month.
 
The rate increase made on Thursday is the fifth in the current round of monetary tightening, which began in August last year. It was also the first monetary board meeting since Rhee Chang-yong was appointed as Bank of Korea Governor last month.
 
At a press conference held last month, Rhee said that he is more concerned about inflation than slow growth.
 
The projected inflation over the 12 months from May was 3.3 percent, according to the Bank of Korea. It is the highest level since 3.3 percent was reported in October 2012.
 
Korea’s consumer prices in April jumped 4.8 percent on year. It was the fastest on-year rise since the 4.8 percent increase in October 2008 and was also the second consecutive month in which inflation exceeded 4 percent.
 
A hawkish Fed is also pressuring the Bank of Korea.
 
The Fed voted to raise rates by 50 basis points earlier this month. It is forecast to raise rate by another 50 basis points in June and again in July, followed by 25 basis point increases in September, November and December, according to Lim Jae-kyun, an analyst at KB Securities. 
 
That will place the U.S. rate at 2.75 percent at the year end.
 

BY JIN MIN-JI [jin.minji@joongang.co.kr]
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)