BOK to Raise Interest Rate over Inflation Concerns

Bank of Korea Governor Lee Ju-yeol said Thursday that he expects inflation to continue for the time being and forecast unprecedented supply bottlenecks as the economy recovers from the impact of the coronavirus pandemic.

"The supply bottleneck won't continue indefinitely, but it is difficult to determine when it will be resolved considering the complexity of global supply chains," he told reporters. "The common problem faced by central banks, which must formulate policy by looking into the future, is the fact that uncertainties are continuing to grow."

The BOK raised the key interest rate by a quarter percentage point in August to 0.75 percent after freezing it at 0.5 percent for a year and three months. Lee has repeatedly signaled an additional hike citing the need to tame soaring household debt and real estate prices and an overheated stock market.

"I don't expect major difficulties even if the key rate is increased in November," he told lawmakers during an audit last month.

The BOK's Monetary Policy Committee meets again on Nov. 25 and is expected to hike the rate then, bringing it to around one percent for the first time since the pandemic started.