South Korea’s central bank hikes key rate from record low
SEOUL, Korea, Republic Of — South Korea’s central bank raised interest rates from a record low Thursday in its first increase since June 2011 in defiance of North Korean threats as Asia’s fourth-largest economy exceeds expectations on robust exports.
Convening one day after North Korea test-fired its most powerful missile yet, Bank of Korea’s seven policymakers decided to increase the key rate by a quarter of a percentage point to 1.50 per cent at its November meeting.
Borrowing rates have steadily fallen during the past five years to a record low of 1.25 per cent and stayed at that level since June 2016 to help South Korea’s fragile economic recovery.
Thursday’s decision was widely expected after third-quarter economic growth beat expectations. The South Korean won has gained against major currencies in the past month in anticipation of the rate hike, which will increase returns for investors.