BOK RAISES KEY RATE BY 0.5% POINT

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The Bank of Korea's Monetary Policy Committee raised the benchmark interest rate by 0.5% point, pushing the rate above the 3% line for the first time in ten years.

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The Bank of Korea's Monetary Policy Committee raised the benchmark interest rate again. It's the first ever five straight rate hikes in history. At Point-5% point, it's the second such spike since July. The increase brought the base rate to 3%. The first time the benchmark interest rate went above that mark since October 2012. Now only 0.25%-points differentiates Korea's base interest rate and that of the U.S. The BOK's Monetary Policy Committee said that a high currency exchange rate could cause prices to spike even more when inflation is already raging. Last month's consumer prices rose at the rate of 5.6%. The MPC projects the figure would stay between five and six percent for quite some time. The recent increases in the won-dollar exchange rate could drive up import prices and subsequently domestic prices. The decision by major oil producers to cut down outputs may have been additionally responsible for inflation. The nation's growth projection remained at 2.6% for this year, but it will likely be lowered than the original outlook of 2.1% for 2023. The Committee explained that despite the concerns over economic slowdown, interest rates must go up as inflation rate is greatly surpassing the target. The central bank started raising the benchmark interest rate since August 2021. The accumulated rate increase over the past 14 months comes to 2.5% points.