South Korea has raised interest rates for the first time in a major Asian economy
Since the coronavirus outbreak began, South Korea has become the first major Asian economy to raise interest rates.
The Bank of Korea raised its benchmark interest rate from 0.5 percent to 0.75 percent, a new low.
The move aims to help the country’s consumer debt and home prices, which have risen dramatically in recent months.
Central banks all over the world are attempting to strike a balance between the impact of ongoing Covid-19 infections and economic threats like excessive inflation.
The Bank of Korea has lifted its main interest rate for the first time in almost three years.
The move comes as the central bank tries to strike a balance between assisting the country’s economic recovery and the concerns about rising debt and inflation.
Since May, policymakers in Asia’s fourth largest economy have indicated that they are prepared to raise borrowing costs.
Last month, the country was placed on a partial lockdown due to the latest Covid-19 outbreak.
Central banks throughout the world are poised to begin removing pandemic-era policies, which included emergency stimulus measures introduced while economies were shut down to slow the spread of Covid-19.
So far this year, the majority of countries that have raised borrowing costs have been emerging economies where inflation has accelerated as demand for goods and services has recovered.
In Asia, Sri Lanka became the region’s first country to boost interest rates last week.
Last week, New Zealand was anticipated to become the first advanced nation in the Asia-Pacific region to raise rates in the wake of the coronavirus outbreak.
Prime Minister Jacinda Ardern, on the other hand, issued a statewide lockdown the day before the monetary policy decision was announced.
The Reserve Bank of New Zealand retained its interest rate at a record low of 0.25 percent, citing “the Government’s imposition of Level 4 COVID limitations on activity across New Zealand” in a statement.