BOK raises key rates by 25bps to 1%, ups inflation forecasts

The Bank of Korea (BOK) raised the benchmark interest rates by 25bps to 1% at its monetary policy review meeting held on Thursday.

The policy action by the South Korean central bank was widely anticipated amid rising household debt and inflationary concerns.

Key takeaways from the Summary

Sees 2021 growth at 4.0% vs 4.0% before.

Sees 2021 inflation at 2.3% vs 2.1% before.

Sees 2022 growth at 3.0%.

Sees 2022 growth at 3.0%.

Sees 2022 inflation at 2.0% vs 1.5% before.

Sees 2023 inflation at 1.7%.

Sees 2023 growth at 2.5%.

Consumption to improve gradually.

Exports, investment to sustain buoyancy.

To monitor build up of financial imbalances.

To monitor pace of growth and inflation.

To monitor monetary policies abroad.

To monitor coronavirus spread.

S. Korea's inflation to run far above 2%.

S. Korea's core inflation to increase to upper-1% level this year.

Growth in household lending slowed slightly.

Market reaction

USD/KRW spikes to daily highs of 1,190.73 on the expected BOK rate hike, leaving won traders will little surprise.

The spot was last seen trading at 1,190, up 0.11% on a daily basis.

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