Svmuu News: The Monetary Policy Committee of the Bank of Korea stated on the 28th that it will continue to maintain a stance of raising interest rates in the future, while comprehensively considering factors related to inflation and financial stability. The Bank of Korea had previously announced its first interest rate hike in three and a half years. Explaining the rationale behind this rate hike, the committee stated: “ As economic growth gains momentum driven by exports and investment, inflation is expected to remain above the target level for a considerable period, and risks to financial stability also persist.” The Committee projected that “supported by a strong semiconductor business cycle, exports and investment will continue to grow at a high rate, and as the recovery in consumption broadens due to improving income conditions, the economy is expected to maintain robust growth. This year’s economic growth is projected to be significantly higher than the May forecast (2.6%).”
Regarding prices, the Committee expects inflation to remain elevated for a considerable period. The Committee also assessed that increased volatility in the won-dollar exchange rate, coupled with simultaneous growth in housing-related and other loans, has driven a sharp rise in household debt, while the upward trend in housing prices in the Seoul metropolitan area has further intensified. Taking these factors into account, the Committee stated, “We currently judge it necessary to maintain a stance of raising interest rates.” (Jin Shi)