October 13, 2022 09:24
The Bank of Korea on Wednesday hiked the base interest rate by another half percentage point to three percent to slow down runaway inflation and arrest the won's fall against the U.S. dollar.
The last time the base rate rose to three percent was in October 2012. The BOK raised the rate by half a percentage point for the first time in July of this year and has boosted it five consecutive times this year.
BOK Governor Rhee Chang-yong told reporters, "Inflation is rising at a high rate and consumer prices are expected to keep growing in the five-percent range until the first quarter of next year."
Lee hinted at another hike in late November, when the BOK's Monetary Policy Committee meets for the last time this year, as the U.S. Federal Reserve is expected to further raise the rate in early November.
The central bank had no choice but to defend the Korean won, which has fallen to a 13-year low of more than W1,400 against the greenback and to narrow the gap with the U.S. base rate that rose to three to 3.25 percent last month.
But the hike has increased worries of an economic slowdown. The BOK now doubts whether the Korean economy can reach its projection of 2.1 percent next year.
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