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 stated on Monday that the central bank's August rate hike, conducted ahead of the U.S. Federal Reserve's September action, helped mitigate the economic impact of monetary tightening in South Korea. Shin revealed during a parliamentary audit of the BOK that the preemptive rate increase provided the country with additional time to adapt.
He emphasized that initiating rate hikes early incurs lower economic costs compared to having to raise rates reactively due to market pressures. Shin also highlighted that the early action helped shape market expectations, as the likelihood of BOK's rate hikes was already evident in bond yields and other market indicators before the actual hikes were implemented.
The BOK had increased its policy rate by 0.25 percentage points in both July and August, ultimately reaching a 3% rate. In contrast, the Fed raised its benchmark rate by the same margin in September, marking its first increase since July 2023, and set it within a range of 3.75% to 4%. Governor Shin noted these details during the parliamentary audit.
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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