South Korea is the first major Asian economy to raise interest rates

South Korea’s central bank raised interest rates from 0.25% to 0.75% in the first of these measures for a major Asian country.

The Bank of Korea’s Monetary Policy Board (BOK) voted to hike the policy rate at the sixth rate-setting meeting this year.

The central bank’s move came as Korea faces its worst coronavirus outbreak in history, with the number of new daily infections remaining above 1,000 for more than 50 days.

Some analysts have speculated that the bank could raise its key interest rate this month, with Gov. Lee Ju-yeol strongly hinting that monetary policy normalization could begin “by this year.”

The bank cut the interest rate to an all-time low of 0.5% in May of last year after implementing an emergency cut of half a degree Celsius in order to strengthen the economy affected by the Corona pandemic.

Despite signs of a strong recovery in exports, weak consumption affected employment and increased pressure on policymakers. The Korean economy is showing signs of recovery thanks to a robust recovery in exports. Exports jumped 40.9% year-on-year in the first 20 days of August on strong demand for crisps, automobiles and petroleum products.

Exports, which make up half of the economy, grew 29.6% year-on-year in July to a record high of $ 55.4 billion, an increase for the ninth consecutive month.