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Bank of Korea “Base Interest Rate ‘On Hold’ Amid High Inflation, Household Debt and Uncertainty”

NSP NEWS AGENCY, By Soon-ki Lee and Soo-in Kang, 2023-12-01 11:26 ENX7
#BOK #BaseInterestRate #Freezing

(Seoul=NSP NEWS AGENCY) = The BOK’s Monetary Policy Committee cited rising household debt and uncertain external conditions as reasons for keeping the base interest rate unchanged at 3.5 per cent.

On the 30th, the BOK explained the reasons for maintaining the base interest rate, saying,"Although the inflation rate was higher than initially expected, it is appropriate to maintain a tight monetary stance as the underlying slowdown is expected to continue, and the trend of household debt growth and uncertainty in external conditions remain high."

On this day, the Monetary Policy Committee froze the base interest rate at 3.5% for seven consecutive times since last February.


Commenting on external economic conditions, it said, “Growth is expected to continue to slow due to concerns over further tightening by the US Federal Reserve(Fed) and the prolonged monetary tightening in major economies, although geopolitical risks have eased.” “Going forward, the global economy and international financial markets are likely to be affected by the movement of international oil prices and the slowdown in global inflation, monetary policy operations and spillovers in major economies, and the development of the Israel-Hamas conflict,”

On domestic economic growth rate, it said, “Growth rate is expected to be 1.4% this year, in line with the August forecast, and to rise to 2.1% next year, but slightly below the previous forecast(2.2%) due to prolonged monetary tightening at home and abroad and a slower consumption recovery.”

On this day, the BOK also revised its economic forecast. The economic growth rate announced by the BOK last August was 1.4% for this year and 2.2% for next year, but on this day, it lowered its forecast for next year by 0.1 percentage points to 1.4% for this year and 2.1% for next year.

The BOK also revised its consumer price inflation forecast up 0.1 percentage point to 3.6 per cent this year and up 0.2 percentage point to 2.6 per cent next year from its August forecast. The inflation rate forecast for 2025 was set at 2.1%.

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