Bank of Korea holds policy rate at 3.00%, leaves room for further increases

The Bank of Korea held its policy rate at 3.00% per year on the 22nd. Governor Shin Hyun-song said stronger inflation made it necessary to maintain a restrictive policy stance, leaving open the possibility of further rate increases.

The bank's Monetary Policy Board said it held rates because it needed to monitor how domestic and external risks develop and assess the effects of the two preceding policy rate increases.

The bank raised its policy rate by 0.25 percentage points in each of July and August, two consecutive months.

Governor Shin said the bank would continue responding with restrictive policy as economic growth and inflation were becoming stronger. Consumer price inflation in September was 2.9%, exceeding the bank's 2% inflation target.

The bank expected large bonus payments by major domestic companies beginning in the first quarter of next year, January through March, to boost consumption and put upward pressure on prices. It estimated that seven major companies, including Samsung Electronics and SK hynix, would pay about 70 trillion won in bonuses in the first quarter of next year.