BOK Monetary Policy Board: "Need to Maintain Interest Rate Hike Stance"

The Bank of Korea's Monetary Policy Board stated, "We have determined that it is necessary to continue the stance of raising interest rates for future monetary policy."

In the monetary policy decision statement released today (July 16), the board said, "The timing and pace of additional hikes will be determined while monitoring the degree of inflationary pressure, the trend of economic improvement, and financial stability conditions."

The board disclosed that all seven members voted in favor of raising the base rate by 0.25 percentage points (p), from 2.50% to 2.75% per annum, on this day.

Regarding the domestic economy, the board assessed, "Growth has expanded as exports and investments, centered on the semiconductor sector, continue to show a high growth trend, and consumption also shows a favorable flow."

It further stated, "This year's growth rate is expected to significantly exceed the forecast of 2.6% made last 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 pressures from income improvements gradually expand, despite the decline in international oil prices."

It projected, "This year's consumer price inflation rate will generally align with the May forecast of 2.7%, but the core inflation rate will 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 increased significantly as both housing-related loans and other loans grew, and the upward trend in housing prices in the metropolitan area has expanded."

The board emphasized, "We must continue to pay close attention to high exchange rate volatility, the rise in housing prices in the metropolitan area, and the expanding growth of household debt."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.