Bank of Korea Monetary Policy Board: "Need to Maintain Interest Rate Hike Stance"

The Monetary Policy Board of the Bank of Korea (BOK) stated today (July 16) that it judges it necessary to maintain the current stance of interest rate hikes for future monetary policy.
In its monetary policy direction statement released today, the board said, "The timing and pace of additional hikes will be determined by monitoring the level of inflationary pressure, the trend of economic recovery, and the situation of financial stability."
The board also disclosed that all seven members voted in favor of raising the base interest rate by 0.25 percentage points (p), from 2.50% to 2.75% per annum.
Regarding the domestic economy, the board assessed that "growth has expanded as exports and investments, centered on the semiconductor sector, continue to show high growth, and consumption also maintains a positive trend."
It further stated, "This year's growth rate is expected to significantly exceed the forecast of 2.6% made in May."
The revised forecast will be announced in August.
Regarding inflation, the board analyzed, "Going forward, the inflation rate will remain at a high level for a considerable period, as the impact of previously increased costs and exchange rates persists, and demand-side pressure due to income improvement gradually expands, despite the decline in international oil prices."
It projected that "the annual consumer price inflation rate will generally align with the May forecast of 2.7%, but the core inflation rate is expected to be slightly higher than the previous forecast of 2.4%."
The board noted, "The won-dollar exchange rate rose to the mid-1,500 won range due to the outflow of foreign stock funds and the strength of the U.S. dollar, but has since fallen to the high-1,400 won range as foreign exchange supply and demand improved."
It added, "Household loans have increased significantly as both housing-related loans and other loans have risen, and the upward trend in housing prices in the Seoul metropolitan area has expanded."
The board emphasized, "We must remain vigilant regarding high exchange rate volatility, the rise in housing prices in the metropolitan area, and the expanding growth of household debt."
※ Please note: This article was translated by AI and may contain errors.