Early rate hike ahead of Fed's move minimized economic costs: BOK chief
Bank of Korea (BOK) Gov. Shin Hyun-song said Monday that the central bank's August rate hike ahead of the U.S. Federal Reserve's September move gave Korea more time to respond and helped minimize the economic costs of monetary tightening. "We signaled a shift toward higher interest rates earlier than many other major economies. By raising rates in August, ahead of the Fed's September hike, we…
Bank of Korea Governor Shin Hyun-song affirmed on Monday that Korea's August interest rate hike, implemented before the Federal Reserve's September move, effectively managed economic costs from monetary tightening. Shin stated that Korea had signaled an earlier shift toward higher interest rates compared to many other leading economies.
He explained that raising rates in August, in anticipation of the Fed's move, provided the nation with valuable time. According to Shin, acting early incurs lesser economic costs than having to increase rates in response to market pressures. He added that the preemptive move also aided in shaping market expectations, as the anticipation of BOK's rate hikes was already evident in bond yields and market prices prior to the actual hikes.
The Bank of Korea increased its policy rate by 0.25 percentage points in both July and August, reaching a 3% level. The Federal Reserve raised its benchmark rate by the same margin in September, its inaugural increase since July 2023, to sit between 3.75% and 4%. During the parliamentary audit, Shin stressed these points regarding the earlier rate hike's benefits.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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