South Korea’s central bank chief pledges to adjust key rate in 2022

SEOUL: The governor of South Korea’s central bank said on Friday that key interest rates will need to be adjusted as an economic recovery takes shape in 2022, suggesting that further tightening is underway as pressures on prices are escalating.

“The degree of monetary policy easing will be adjusted appropriately depending on improving economic conditions,” Bank of Korea Governor Lee Ju-yeol said in a speech ahead of the New Year.

“We should watch carefully to see if there is a possibility that inflationary pressures will last longer than expected.”

BOK raised interest rates in November for the second time since the onset of the pandemic to 1.00 percent and revised up its inflation outlook amid growing concerns over rising household debt and consumer prices.

Data released on Friday showed that annual inflation has reached a decade this year. – a peak of 2.5% to beat the central bank forecast, putting the seven members of the BOK board under pressure to increase the base rate again in January during the next rate revision directors.

Analysts polled by Reuters see the interest rate reaching 1.25% in the first quarter and 1.50% by the end of 2022.

(Reporting by Cynthia Kim; Editing by Karishma Singh)

Stephen V. Lee