KCCI: "Interest Rate Hike Inevitable... Additional Increases Should Be Approached with Maximum Caution"

[Asia Economy Reporter Hwang Yoon-joo] On the 26th, the business community expressed that the Bank of Korea's base interest rate hike was inevitable but urged caution regarding further increases.

Lee Kyung-sang, Head of the Economic Research Department at the Korea Chamber of Commerce and Industry, stated in a commentary on the 26th, "Please exercise utmost caution regarding any additional base interest rate hikes."

He explained, "While I understand that this base interest rate hike was an unavoidable choice considering various factors such as curbing the increase in household loans, stabilizing real estate prices, and suppressing inflation, we must also take into account the weakening economic recovery momentum due to the fourth wave of COVID-19 and strengthened social distancing measures, especially the prolonged suffering of vulnerable groups including small and medium-sized enterprises and small business owners."

He added that some small business owners are facing the risk of closure due to the COVID-19 situation, urging, "The government should expedite support for medium-sized and small business damages and the distribution of disaster relief funds to minimize the financial burden on vulnerable groups."

Meanwhile, the Bank of Korea raised the base interest rate by 0.25 percentage points for the first time in 15 months on the morning of the same day. Accordingly, the base interest rate changed from the historically lowest level of 0.5% to 0.75%.