South Korea’s central bank will deliver its first-ever 50 basis point rate rise to 2.25%; turning up the heat on a rate-hiking campaign as inflation tops a 24-year high and has yet to peak.
One of the first central banks to start raising rates, in August 2021, the Bank of Korea is still grappling with inflation; which reached 6.0% in June, the highest since November 1998 when an Asian financial crisis was in full swing.
The BoK is one of many central banks now feeling the pressure; from an aggressive interest rate hiking campaign from the U.S. Federal Reserve, which has driven the U.S. dollar to a two-decade high.
The Korean won has been one of the worst performers in emerging markets this year; tumbling more than 8.5% and set to fall further.
The poll predicted inflation to stay above the BoK’s target of 2.0% even through the next year. It was forecast to average 5.0% in 2022 and 2.7% in 2023; up significantly from 3.3% and 2.0% in the April poll.