Korea Monetary Policy


Central Bank lifts interest rates

At the monetary policy meeting held on 11 March, the Bank of Korea (BoK) raised the BoK Base Rate by 25 basis points to 3.00%, marking the fourth interest rate hike since the BoK started tightening policy in July 2010. At the current level, the policy rate is at its highest level since November 2008. Inflation was above the BoK 3.0% 1.0% tolerance range in February for a second consecutive month, driven by the surge in oil and food prices and thus providing a case for a tightening move. In a press briefing released after the meeting, BoK Governor Kim Choong-soo suggested that in the coming months, the BoK will gradually tighten monetary policy rather than raising rates abruptly. Accordingly, market analysts believe that the BoK will refrain from lifting interest rates at its next policy meeting on 12 April.

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