BENGALURU : The Bank of Korea is likely to raise its policy rate back to where it was before the pandemic on Friday, a Reuters poll found, as it looks to restrain rising inflation and the increasing debt that households are taking on to buy property.
South Korea's central bank was the first and only one among its main Asian peers to raise interest rates twice last year, most recently by 25 basis points at its last meeting, in November.
Inflation in Asia's fourth-largest economy accelerated last year to its highest level since 2011, far outpacing the central bank's own forecasts, suggesting to policymakers that a period of higher prices would last longer than anticipated. After an expected rise on Friday, the BOK was forecast to stay on hold in the first half of this year and then deliver another rate rise in the third quarter to 1.50per cent. It was then expected to stay there at least through 2023."The Bank of Korea rarely hikes interest rates at consecutive meetings. After November's increase, we expect the policy rate to be left unchanged on Friday," said Alex Holmes at Capital Economics, who sees three rate increases later this year.