South Korea’s central bank will deliver its first-ever 50 basis point rate rise to 2.25 percent on Wednesday, turning up the heat on a rate-hiking campaign as inflation tops a 24-year high and has yet to peak, a Reuters poll showed on Monday.
One of the first central banks to start raising rates, in August 2021, the Bank of Korea is still grappling with inflation, which reached 6.0 percent in June, the highest since November 1998 when an Asian financial crisis was in full swing.
To arrest further price rises and cushion a falling currency, 27 of 32 economists in a July 4-8 Reuters poll expected the BoK to go for an unprecedented half-point hike on July 13. Only five expected a quarter-point hike.
The BoK is one of many central banks now feeling the pressure from an aggressive interest rate hiking campaign from the US Federal Reserve, which has driven the US dollar to a two-decade high.
The Korean won has been one of the worst performers in emerging markets this year, tumbling more than 8.5 percent and set to fall further.
