[Weekly Outlook] Bank of Korea Holds Monetary Policy Meeting on 14th Amid 'Governor Vacancy'... Focus on Base Rate Adjustment

[Asia Economy Sejong=Reporter Son Seon-hee] On the 14th, the Bank of Korea will hold a Monetary Policy Committee (MPC) meeting to discuss adjustments to the base interest rate. With the position of the Bank of Korea governor vacant and expectations growing that the Bank will take active measures to respond to recent sharp inflation, the business community's attention is focused on this meeting.

Considering last month's consumer price inflation rate soaring to the 4% range for the first time in 10 years, there are forecasts that the base interest rate will be raised from 1.25% to 1.50%. However, there are also simultaneous predictions that the base rate will be kept unchanged due to concerns about an economic recession.

This will be the first time since 1998, when the governor began to serve concurrently as the MPC chairperson, that the Bank of Korea makes an interest rate decision with the governor's position vacant. Former Governor Lee Ju-yeol's term ended last month, and the parliamentary confirmation hearing for the new governor nominee Lee Chang-yong is scheduled for the 19th.

Additionally, the Bank of Korea plans to release the 'Financial Market Trends for March' on the 13th. With household loan balances at banks having decreased for three consecutive months from December last year through February this year, it is expected that household loan demand in March was not significant due to rising interest rates and sluggish real estate and stock transactions.

On the same day, Statistics Korea will announce the 'Employment Trends for March.' There is interest in whether the strong employment recovery trend seen at the beginning of the year continued through March amid the spread of the Omicron variant.

In February, the number of employed persons was 27,402,000, an increase of 1,037,000 compared to the same month last year. This increase was the largest for February in 22 years since 2000 (1,362,000).

Attention is also focused on how much national tax revenue has increased. The Ministry of Economy and Finance will release the monthly fiscal trends on the 14th. National tax revenue in January was 49.7 trillion won, an increase of 10.8 trillion won compared to the same month last year. However, excluding temporary factors such as various tax support measures due to the COVID-19 pandemic last year, the increase attributed to economic recovery is estimated to be around 3.2 trillion won.