According to a report released on Tuesday, the Bank of Korea (BOK) is likely to start a cycle of lowering its key interest rate in the third quarter of next year, instead of the initial estimation of early next year. Samsung Securities Co. senior analyst Kim Ji-man attributed the possible delay to the high inflation rate and the U.S. Federal Reserve’s monetary tightening policy.
In August, the BOK held its key interest rate at 3.5 percent for the fifth consecutive month, following seven rate hikes from April 2022 to January 2023. Last week, the Fed decided to keep its benchmark rate between 5.25 and 5.50 percent, but raised the prospect of an additional rate hike later this year to bring inflation down to its 2 percent target. Kim noted that the South Korean consumer price index (CPI) is likely to reach 4 percent by the end of the year and the core inflation rate will go down, albeit slowly.
Bank of Korea (BOK) Gov. Rhee Chang-yong bangs the gavel during a rate-setting meeting at the bank's headquarters in central Seoul, in this file photo taken Aug. 24, 2023. (Pool photo) (Yonhap)
Kim concluded that the BOK will likely begin a cycle of reducing its key interest rate in the third quarter of next year, due to the uncertainties in the inflation and the U.S. monetary policy.
nyway@yna.co.kr
(END)
Related Articles (LEAD) S. Korea’s inflation set to moderate toward 2 pct by end-2024: IMF team (2nd LD) S. Korea’s inflation speeds up in Aug., rate policy in focus BOK sees low chances of systemic risk amid rising debt, falling asset soundness BOK says to keep restrictive stance, review need for further rate hike Consumer sentiment hits 4-month low in Sept. amid slowdown woes (LEAD) Banks’ household loans up sharpest in over 2 yrs in August, rate policy in focus (4th LD) BOK stands pat for 5th time amid slowdown woes MORE(+2) CLOSE