BUSINESS S.Korea raises benchmark interest rate from 0.75 pct to 1 pct

BUSINESS

S.Korea raises benchmark interest rate from 0.75 pct to 1 pct

Xinhua

08:53, November 25, 2021

Currency dealers monitor exchange rates in a trading room at KEB Hana Bank in Seoul on August 20, 2021. (File photo: AFP)

SEOUL, Nov. 25 (Xinhua) -- South Korea's central bank on Thursday raised the benchmark interest rate to 1 percent in a bid to curb inflationary pressure and massive household debts.

Bank of Korea (BOK) Governor Lee Ju-yeol and monetary policy board members decided to increase the seven-day repurchase rate by 25 basis points to 1 percent.

It followed the policy rate hike in August from a record low of 0.50 percent to 0.75 percent.

The rate hike was in line with market expectations. According to a survey of 100 fixed-income experts by the Korea Financial Investment Association (KFIA), 90 percent predicted the rate increase.

Inflationary pressure recently mounted amid the continued record-breaking trend in household debts.

Consumer price surged 3.2 percent in October from a year earlier, marking the fastest gain in almost 10 years since January 2012.

The headline inflation topped the BOK's mid-term inflation target of 2 percent for seven straight months to October.

Household credit, which includes debts owed to banks and other financial institutions as well as purchase on credit, hit a new high of 1,844.9 trillion won (1.6 trillion U.S. dollars) at the end of September.

It increased 36.7 trillion won (31 billion dollars) from three months earlier on the back of the still low borrowing cost.

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