Increased Weight on Additional Interest Rate Hikes Within the Year... Possible as Early as October

The Bank of Korea Raises Base Interest Rate by 0.25%P, Ending Ultra-Low Rates
Additional Rate Hike Possible as Early as October

[Asia Economy Reporter Jang Sehee] As the Bank of Korea raised the base interest rate to 0.75% for the first time in 15 months, market attention is focused on the timing of additional rate hikes. Experts predict that the rate will be raised once more within the year to avoid shocking the economy. The expected timing is October, when the nationwide 70% vaccination target is set.

Im Seeseon, a researcher at Hana Financial Investment, stated, "If no additional hikes are made, the effect of this rate increase will be almost negligible," adding, "Whether it is a hike or a cut, the effect occurs when implemented consecutively, so I expect a rate hike in October or November."

Professor Kim Sangbong of Hansung University’s Department of Economics also said, "The financial imbalance problem is worsening," and added, "We need to proceed by raising interest rates further to suppress demand." Professor Kim also predicted, "An additional rate hike in October is necessary."

The economic recovery following vaccination is also cited as a reason supporting further rate hikes. Professor Andonghyun of Seoul National University’s Department of Economics said, "Exports are performing well, and domestic demand has not significantly declined due to revenge spending," adding, "Considering the effect of supplementary budgets, the growth rate this year is expected to reach around 4.0%."