Bank of Korea to release interest rate decision

The Bank of Korea will today release its interest rate decision for May.

Since May of last year, South Korea’s interest rates have been fixed at a record low of 0.5%. As the inflation rates saw a periodic increase, The Bank of Korea maintains its base rate unchanged due to the nation’s uncertainty about the pandemic and financial imbalances cumulating from growing debts in the housing market. Despite strong exports in the auto sector, Seoul’s harsh restrictions due to mounting COVID-19 cases resulted in reduced consumer spending.

Depending on the recovery process, South Korea’s economy will grow in the medium-term. Amidst worries of global inflation, Seoul is preparing to take cautious steps due to the market’s hindrance for unpredictable fluctuations. Therefore, expect South Korea’s interest rates to remain unchanged. A significant rise in interest rates will likely transpire in the second half of 2022. The Bank will also take concrete measures in determining its technology supplier to develop its pilot program for the digital won. The Bank perceives the digital won as a potential benefit in terms of security and transaction efficiency, hence it plans to conduct mock tests on central bank digital currency (CBDC) this year and prepare for distribution.