South Korea announces second successive rate hike
The increase, from 2.75 per cent to 3.0 per cent followed a similar move in July.
South Korea's central bank raised interest rates for the second consecutive time on Aug 28, signaling robust economic growth while acknowledging that inflation may persist due to higher energy costs. The Bank of Korea stated that it was appropriate to increase the base rate because the domestic economy has grown stronger-than-expected, fueled by strong exports and a recovery in domestic demand.
The hike, from 2.75% to 3.0%, mirrors a similar move in July, the first increase in over three years, amid persistently high inflation. July's consumer prices climbed 2.8% year-on-year, slightly below June's figure but well above the bank's 2% target, primarily driven by energy cost surges caused by the Middle East crisis. Monetary policymakers also upgraded their economic growth forecasts for this year to 3.3% and 2.9% for next year, compared to their May estimates of 2.6% and 2.1% respectively.
The bank attributed this strong growth to exports and investment, with South Korea's two largest chipmakers, Samsung Electronics and SK Hynix, playing a significant role. These companies reported massive profits, with Samsung's operating profit soaring over 1,800% in Q2 and SK Hynix's net profit jumping more than 1,200% in the same period.
Samsung and SK Hynix's gains contributed to South Korea's benchmark Kospi index reaching a record high above 9,000 points in June before a tech downturn dragged it sharply lower.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Bank of Korea delivers back-to-back rate hikes as price pressures persist nst.com.my
- South Korea announces second successive rate hike freemalaysiatoday.com
