Bank of Korea hikes key interest rate to 1.75% for Nov.
- 5 years ago
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In its final monetary policy meeting of the year,... South Korea's central bank has hiked its benchmark interest rate by 25 basis points.
Kim Hyesung starts us off.
For the first time in about a year, the Bank of Korea has raised its benchmark interest rate to one-point-75 percent.
This also marks the first hike since November of last year, lifting the rate to its highest level since June 2015.
The central bank pointed to growing financial imbalances for its latest decision.
South Korea's household debt has topped one-point-three trillion U.S. dollars... putting pressure on the bank to raise rates and curb lending.
As of the third quarter, household debt has grown by six-point-seven percent on-year, faster than the average income growth of four-point-six percent.
The widening rate gap with the U.S. is also a concern.
Had the BOK left the rate unchanged,... its rate gap with the U.S. could have widened to more than one percent... as the Fed is widely expected to raise rates again in December... increasing risks of a possible capital outflow.
Given the local economy will face slower growth in 2019 and 2020, the Bank of Korea also doesn't have as much manuevering room to lift its rates next year.
Last month, the BOK slashed its earlier growth forecast for 2018 to 2-point-seven percent from 2-point-9 percent, with 2-point-seven percent growth for 2019.
Kim Hyesung, Arirang News.
In its final monetary policy meeting of the year,... South Korea's central bank has hiked its benchmark interest rate by 25 basis points.
Kim Hyesung starts us off.
For the first time in about a year, the Bank of Korea has raised its benchmark interest rate to one-point-75 percent.
This also marks the first hike since November of last year, lifting the rate to its highest level since June 2015.
The central bank pointed to growing financial imbalances for its latest decision.
South Korea's household debt has topped one-point-three trillion U.S. dollars... putting pressure on the bank to raise rates and curb lending.
As of the third quarter, household debt has grown by six-point-seven percent on-year, faster than the average income growth of four-point-six percent.
The widening rate gap with the U.S. is also a concern.
Had the BOK left the rate unchanged,... its rate gap with the U.S. could have widened to more than one percent... as the Fed is widely expected to raise rates again in December... increasing risks of a possible capital outflow.
Given the local economy will face slower growth in 2019 and 2020, the Bank of Korea also doesn't have as much manuevering room to lift its rates next year.
Last month, the BOK slashed its earlier growth forecast for 2018 to 2-point-seven percent from 2-point-9 percent, with 2-point-seven percent growth for 2019.
Kim Hyesung, Arirang News.