Bank of Korea Holds Base Interest Rate at 1.25%... Inflation Rate Revised Up to 3.1% (Update)

The Monetary Policy Committee of the Bank of Korea decided on the 24th at the monetary policy direction meeting to keep the base interest rate, currently at 1.25% per annum, unchanged.

Previously, to respond to the economic downturn caused by COVID-19, the Monetary Policy Committee lowered the base rate to an all-time low of 0.5% until May last year, then raised the rate by 0.25 percentage points each in August and November of the same year, and again in January this year, bringing it up to 1.25% per annum.

Although the Bank of Korea recently raised the rate twice consecutively by 0.25 percentage points, it avoided a historic three consecutive increases by freezing the rate this time.

A rapid rise in the base interest rate could further stimulate market interest rates, increasing the interest burden on households and self-employed individuals, and potentially dampening the real economy, so this move is interpreted as a speed adjustment.

On this day, the Bank of Korea projected in its revised economic outlook that the annual consumer price inflation rate in South Korea will reach 3.1% this year. This is 1.1 percentage points higher than the forecast made in November (2.0%). The inflation forecast for next year was adjusted upward from 1.7% to 2.0%, an increase of 0.3 percentage points.

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