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S. Korea raises interest rate for first time in a year
SEOUL, Nov 30, 2018 (BSS/AFP) – South Korea on Friday raised its key
interest rate for the first time in a year, in a bid to curb snowballing
household debts and a housing price hike casting a pall over Asia’s fourth-
largest economy.
The central Bank of Korea raised the benchmark overnight inter-bank
lending rate by a quarter point to 1.75 percent — the first rate hike since
November last year.
Outstanding household debts at the world’s 11th-largest economy hit a
record 1,514 trillion won ($1.3 trillion) as of late September, while housing
prices have surged, especially in the capital Seoul and its suburb areas.
Housing sales prices in Seoul and its suburb areas — home to a half of
the country’s 50 million population — rose three percent from January to
October this year, the highest in three years.
The decision came as the South faces double challenges of growing
household debts and economic slowdown as global trade war sapped demand for
made-in-Korea cars and high-tech gadgets, raising concerns over the country’s
export-reliant economy.
Overseas shipments account for more than half of the country’s economy.
The central bank was largely expected to raise the key rate this month,
according to multiple local surveys, due to concern of capital flight from
Seoul financial markets after a series of rate hikes in the US.
The US Fed’s current benchmark rate is 2 to 2.25 percent, amid
speculations that the Fed is mulling more rate hikes next year.
BSS/AFP/HR/0922