59% of Citizens and Businesspeople Expect US Fed Baby Step... 30% Anticipate Hold

Survey of 2,100 Users on Communication Platform
61% of Citizens Say "No to Korea's Interest Rate Hike"

Ahead of the U.S. Federal Open Market Committee (FOMC) meeting, when asked about their expectations for the 'U.S. interest rate level,' about 6 out of 10 of the 2,100 citizens and businesspeople surveyed predicted a 'baby step (0.25 percentage point increase).'

According to the Korea Chamber of Commerce and Industry's recent survey conducted through a communication platform titled 'The Interest Rate: Opinions on the Direction of the U.S. Base Rate,' 58.9% of respondents chose a 'baby step (0.25 percentage point hike).' Summarizing the comments, the speculation was that 'although a lot of money is globally circulating, the financial instability triggered by SVB will slow down the Fed's efforts to curb inflation.' The opinion for a rate freeze accounted for 30.5%.

Regarding expectations for the Bank of Korea's Monetary Policy Committee decision in April, 47.6% of respondents anticipated a 'rate freeze,' while 32.0% advocated for a 0.25 percentage point increase in line with the U.S.

In fact, businesspeople and citizens expressed difficulties caused by high interest rates in their comments. One small business owner said, “The facility investment, which was made with high hopes, is being hampered by the high interest rates,” adding, “Interest costs are a problem, but I can't sleep worrying that domestic funding channels might be blocked due to the SVB bankruptcy.” A housewife said, “With rising prices, business is bad, but loan interest is snowballing. My husband even gave up his days off, but there’s nothing left.”

As voices from economic agents affected by the interest rate hike emerge, the Bank of Korea’s Monetary Policy Committee’s calculations have become more complicated. If the U.S. Federal Reserve decides on a baby step tomorrow, there will be a need to align with the Fed to respond to won depreciation and rising import prices, but the pain from the rate hike will be borne entirely by the citizens.

The Korea Chamber of Commerce and Industry stated, “The fear of the absolute level of interest rates is greater than concerns about the side effects of the Korea-U.S. interest rate gap,” adding, “Since both households and businesses are complaining about being at their limits, a monetary policy that considers the economy and debt burden seems necessary.”