[Weekly Outlook] Bank of Korea to Hold Monetary Policy Meeting on 25th... Discussion on Base Rate Hike

[Asia Economy Sejong=Reporter Son Seon-hee] The Bank of Korea is scheduled to hold a Monetary Policy Committee (MPC) meeting on the 25th to decide whether to raise the base interest rate. Along with this, it is expected to release revised forecasts for this year's Korean economic growth rate and inflation.

Last month, the consumer price inflation rate soared to 6.3%, marking the highest level in 23 years and 8 months. This is the second consecutive month recording inflation above 6%, following June. Considering the interest rate gap with the United States, it is highly likely that the Bank of Korea will proceed with an additional base rate hike.

However, the rate hike is expected not to be a big step (a 0.5 percentage point increase in the base rate), taking into account concerns about an economic recession.

The Bank of Korea will also release the 'August Consumer Sentiment Survey Results' on the 23rd. Through this, it will announce the 'expected inflation rate,' which is the forecast for consumer price inflation over the next year. In the July survey, this indicator recorded an all-time high of 4.7%. Attention is focused on whether the expected inflation rate will break records again this month due to the consumer price inflation rate exceeding 6%.

Additionally, the provisional statistics on household credit for the second quarter will be released on the 24th. This data provides an estimate of the total household debt, including loans and credit card credit purchases. In the first quarter, household credit decreased compared to the previous quarter (the fourth quarter of last year) for the first time in nine years since the first quarter of 2013.

The Ministry of Economy and Finance will announce the new government's direction for performance management of fiscal projects on the 22nd. This is interpreted as an effort to refine related systems to more closely evaluate the performance of projects funded by the government.

On the same day, Statistics Korea will release regional economic trend statistics for the second quarter, including indicators such as regional production, employment, and consumer price inflation. On the 24th, the '2021 Birth Statistics' will be announced. There is interest in whether the number of births, which fell below 200,000 for the first time in history in 2020, has decreased further. The total fertility rate, which represents the average number of children a Korean woman aged 15 to 49 is expected to have in her lifetime, stood at 0.84 in 2020, already ranking last among OECD member countries.

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