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BOK freezes rate, ending hike cycle

By Im Eun-byel

Published : Feb. 23, 2023 - 09:57

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Bank of Korea Gov. Rhee Chang-yong at a Monetary Policy Board meeting held on Thursday (Joint Press Corps) Bank of Korea Gov. Rhee Chang-yong at a Monetary Policy Board meeting held on Thursday (Joint Press Corps)

The Bank of Korea kept its key interest rate unchanged at 3.5 percent Thursday, putting on hold a rate-raising policy that has lasted 1 1/2 years.

The central bank began a series of rate hikes in August 2021 to tamp down soaring prices amid the pandemic recovery. The BOK raised the benchmark interest rate seven consecutive times.

The bank’s decision falls in line with market expectations which projected it would end the hike considering the slowing global economy.

The US Federal Bank has signaled it will maintain its aggressive monetary policy for the time being to combat ongoing inflation.

Thursday’s decision takes the gap between Korea's key rate and that of the US to 1.75 percentage points, breaking the previous 1.5 percentage point record set in 2000.

The widened gap has led to concerns it could lead to foreign capital outflow and the fall of the Korean currency against the dollar.

The next rate-setting meeting is slated to take place on April 11, following the US Federal Reserve’s Federal Open Market Committee meeting on March 21-22.