The Bank of Korea "Will Appropriately Adjust the Degree of Monetary Policy Easing Next Year"... May Raise Rates Four Times (Comprehensive)

Announcement of the '2022 Monetary and Credit Policy Operation Direction'
Inflation Expected at 2% Range, Growth Forecast at 3%

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The Bank of Korea indicated an interest rate hike, stating that it will appropriately adjust the degree of monetary policy easing next year. This judgment is based on the view that normalizing interest rates is desirable considering the high inflation rate and the surge in household debt.

On the 24th, the Bank of Korea announced the '2022 Monetary and Credit Policy Operation Direction' containing this information. The timing of adjusting the degree of easing will be determined by considering factors such as growth and inflation trends, financial imbalance situations, and the impact of monetary policy changes in major countries.

Experts believe that after one rate hike in the first quarter (January and February) of next year, there is a possibility of three additional increases. If the current rate of 1.00% is raised four times, it could rise to as high as 2.00%.

Professor Kim Sangbong of Hansung University’s Department of Economics said, "A scenario of one rate hike in the first quarter next year followed by three additional hikes seems possible," adding, "We need to consider our economic situation, but we should respond while observing the situations in major countries such as the United States." He further added, "There is a high possibility of an additional hike after observing the US monetary policy around June next year."

Regarding the inflation rate, the Bank of Korea expects that as the impact of supply-side factors such as international oil prices gradually decreases, inflation will be somewhat lower than this year but will continue at around the 2% level. The GDP growth rate for next year is expected to be around 3%, but "the worsening spread of infectious diseases domestically and internationally, prolonged global supply disruptions, and the slowdown of China’s economic growth could act as downside risks," it forecasted.

This content was produced with the assistance of AI translation services.