[Economic Outlook] Eyes on the Bank of Korea Monetary Policy Committee: Will Interest Rates Rise? Also Focus on Last Year's Excess Tax Revenue Size

[Sejong=Asia Economy Reporter Son Seonhee] The Bank of Korea will decide whether to raise the base interest rate next week. Attention is focused on whether the Bank of Korea, which has gradually raised the base rate in August and November last year, will decide on an additional rate hike at the beginning of the year.

The Bank of Korea plans to hold its first monetary policy meeting of the new year on the 14th to decide the base interest rate. Considering the high inflation rate continuing since the second half of last year and the possibility of an early rate hike in the United States, the Monetary Policy Committee is likely to raise the rate by 0.25 percentage points for the first time in two months since November last year. The Bank of Korea raised the base rate from 0.5% to 0.75% by 0.25 percentage points in August last year, and then raised it by an additional 0.25 percentage points in November, ushering in the era of a 1% interest rate.

However, some argue that caution is needed in raising the base rate considering the economic downturn caused by the spread of COVID-19 variants such as Omicron and strengthened social distancing measures.

On the 13th, attention will also be on the excess tax revenue for last year announced by the Ministry of Economy and Finance. The Ministry plans to announce the fiscal situation, including national tax revenue and expenditure and the integrated fiscal balance as of November last year, through the monthly fiscal trend report.

The biggest focus is on the scale of tax revenue. The Ministry of Economy and Finance predicted that last year's excess tax revenue would reach 19 trillion won, and recent forecasts suggest that this amount will exceed the government's expectations. In July last year, the Ministry already revised the revenue estimate upward by 31.5 trillion won in a large-scale adjustment and expects an additional 19 trillion won to come in. However, if the tax revenue forecast error widens further, it will be difficult to avoid criticism.

The Bank of Korea will announce the 'Financial Market Trends for December 2021' on the 13th. Interest is focused on whether the trend of slowing growth, due to the government's strong household loan regulations in the second half of last year, has continued.

Additionally, Statistics Korea will announce employment trends for December last year on the 12th. It is expected to provide insight into how the surge in COVID-19 cases, the escalation of social distancing measures, and the spread of the Omicron variant have affected the employment market.

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