South Korea: BoK adjusts monetary easing policy step by step, sets 2% inflation target
The Bank of Korea (BoK) said it will gradually adjust its monetary easing policy when pursuing the 2% inflation target in the face of strong recovery signals after the impact of the COVID-19 pandemic.
|Myeongdong shopping street in Seoul, South Korea on August 27, 2020. Photo: AFP/VNA|
In a regular report, the BoK said that the timing of the rate hike will depend on the evolution of the COVID-19 epidemic and the risks of financial imbalance. According to the report, the BoK will gradually adjust the level of monetary easing as consumer prices are expected to remain above 2% for the time being.
On August 26, the BoK ended 15 months of record low interest rates and made the first rate hike during the outbreak of the COVID-19 pandemic to deal with rising inflation and curbing inflation. increase in household debt. The move marks the first rate hike since May 2020, when the BoK lowered the base rate to a record low of 0.5%.
Household debt in South Korea hit a record high of 1.805.900 billion won ($1.540 billion) in the second quarter of 2021, up 41.2 trillion won from the previous three months, according to BoK data.
The same day, the BoK said it would extend financial support to businesses and small merchants by six months to help them ease their financial burden due to the impact of the COVID-19 pandemic. Under the plan, the BoK will finance local banks at an interest rate of 0.25% to incentivize them to expand lending to small businesses and merchants.