By Kim Young Shin

The Bank of Korea has raised its base rate by 0.25 percentage points, from 1.25 percent to 1.50 percent. This is the first time in 6 years and 5 months for Korea to raise its rates, since June 2011.

“The solid trend of domestic economic growth has continued at the level of the potential growth rate, and consumer price inflation will gradually approach the target level. Maintaining a low base rate in such a situation could increase the actual level of monetary easing and build up financial imbalances. The Monetary Policy Board judged that the level of monetary easing, which has been increasing to respond to low growth and to low prices, should be adjusted and agreed to raise the base rate by 0.25 percentage points,” said Bank of Korea Governor Lee Juyeol.

The Monetary Policy Board forecasts that inflationary pressure on the demand side will not be high for the time being, while the domestic economy is expected to continue solid growth.

ysk1111@korea.kr