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Bank of Korea raises base interest rate 50 basis points

Published: 13 Jul. 2022, 09:52 Updated: 13 Jul. 2022, 12:30

Bank of Korea Gov. Rhee Chang-yong at a monetary policy board meeting held in central Seoul on Wednesday [BOK]

The Bank of Korea raised the base interest rate by a historic 50 basis points to 2.25 percent, the central bank announced Wednesday.

This is the first time for the central bank to raise the rate by 50 basis points at once, and is also the third consecutive rate increase this year. The raise was forecast by many analysts, as central bankers are working to battle high inflation.

Wednesday's rate increase is the sixth in the current round of monetary tightening, which began in August last year.

The central bank repeatedly signaled for an aggressive rate increase, saying that curbing inflation is currently the bank’s focus and that rates are still low.

Inflation grew 6 percent on year in June, the highest in more than 23 years since 6.8 percent reached in July 1998.
A hawkish Fed has been pressuring the Bank of Korea.

The Fed voted to raise its rate by 75 basis points in a June meeting. It was the largest increase since 1994. Federal Reserve Chair Jerome Powell in June indicated that another 75 basis points rate increase could be possible this month.

The next Federal Open Market Committee meeting will span two days and end on July 27.

On the same day, the Bank of Korea announced that central banker Rhee Chang-yong and the U.S. Treasury Secretary Janet Yellen will meet at the Bank of Korea office in central Seoul during her visit to Korea on July 19.

They are scheduled to discuss the global economy, finance market and cooperation on economic policies, the bank said.

BY JIN MIN-JI [[email protected]]