{"id":2203698,"date":"2024-02-02T08:00:20","date_gmt":"2024-02-01T23:00:20","guid":{"rendered":"https:\/\/koreapro.org\/?p=2203698"},"modified":"2024-02-01T17:51:53","modified_gmt":"2024-02-01T08:51:53","slug":"bank-of-koreas-steady-rate-aimed-at-curbing-inflation-could-impact-recovery","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/02\/bank-of-koreas-steady-rate-aimed-at-curbing-inflation-could-impact-recovery\/","title":{"rendered":"Bank of Korea\u2019s steady rate aimed at curbing inflation could impact recovery"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Bank of Korea (BOK) Governor Rhee Chang-yong <\/span><a href=\"https:\/\/www.yna.co.kr\/view\/AKR20240201063351003?section=economy\/all&amp;site=major_news02\"><span style=\"font-weight: 400;\">said<\/span><\/a><span style=\"font-weight: 400;\"> Thursday the country needs to maintain a restrictive monetary policy for an extended period to combat inflation. Rhee indicated that the BOK\u2019s restrictive stance would continue while monitoring monetary policy and financial stability data from major countries. He warned that a premature rate cut could increase property prices, potentially derailing economic stability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The South Korean economy has shown signs of recovery, growing slightly after a 0.3% contraction in Q4 2022, driven by rising exports. However, private consumption remains sluggish, affected by global monetary tightening, geopolitical tensions, increasing household debt and China\u2019s economic slowdown. The BOK has kept its key rate <\/span><a href=\"https:\/\/koreapro.org\/2024\/01\/south-koreas-central-bank-holds-rates-steady-amid-inflation-concerns\/\"><span style=\"font-weight: 400;\">steady<\/span><\/a><span style=\"font-weight: 400;\"> for eight sessions following seven consecutive hikes from April 2022 to Jan. 2023.<\/span><\/p>\n<p><b>Why It Matters<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The U.S. Federal Reserve\u2019s decision to <\/span><a href=\"https:\/\/en.yna.co.kr\/view\/AEN20240201000353315\"><span style=\"font-weight: 400;\">hold its benchmark lending rate steady<\/span><\/a><span style=\"font-weight: 400;\">, with Federal Reserve Chairman Jerome Powell suggesting a rate cut in March as unlikely, likely influenced the BOK\u2019s decision to maintain its restrictive stance. With the U.S. resistant toward loosening monetary policies, the BOK\u2019s decision is likely aimed at curbing inflation while avoiding capital flight risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the BOK\u2019s maintenance of its months-long 3.5% interest rate has had a <\/span><a href=\"https:\/\/koreapro.org\/2024\/01\/south-koreas-financial-regulator-takes-aim-at-accounting-malpractice\/\"><span style=\"font-weight: 400;\">negative impact<\/span><\/a><span style=\"font-weight: 400;\"> on the country\u2019s property and construction sectors. It has reduced households\u2019 borrowing capacity and led to delinquencies on <\/span><a href=\"https:\/\/koreapro.org\/2024\/01\/south-koreas-major-builder-turns-to-asset-collateral-amid-soaring-debts\/\"><span style=\"font-weight: 400;\">project financing loans<\/span><\/a><span style=\"font-weight: 400;\">. This downturn in the construction sector, burdened by debt and depreciating real estate assets, could trigger cascading effects throughout the South Korean economy.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>Bank of Korea (BOK) Governor Rhee Chang-yong said Thursday the country needs to maintain a restrictive monetary policy for an extended period to combat inflation. Rhee indicated that the BOK\u2019s restrictive stance would continue while monitoring monetary policy and financial stability data from major countries. He warned that a premature rate cut could increase property [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2203699,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bank of Korea\u2019s steady rate aimed at curbing inflation could impact recovery - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2024\/02\/bank-of-koreas-steady-rate-aimed-at-curbing-inflation-could-impact-recovery\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bank of Korea\u2019s steady rate aimed at curbing inflation could impact recovery - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Bank of Korea (BOK) Governor Rhee Chang-yong said Thursday the country needs to maintain a restrictive monetary policy for an extended period to combat inflation. 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