BOK Faces Pressure to Raise Rates Amid Widening US-Korea Gap
The US Federal Reserve raised its benchmark interest rate by 0.25 percentage points on Thursday, widening the gap between Korea's and the US's benchmark rates to 1.00 percentage point.
This move has increased the likelihood of another interest rate hike from the Bank of Korea (BOK) before the end of this year, as suggested by Kwon Min-soo, senior deputy governor of the BOK.
Kwon stated that given Federal Reserve Chair Kevin Warsh's emphasis on price stability and his suggestion that further rate hikes may be necessary, the Fed is expected to maintain tight monetary policy going forward.
The BOK has been monitoring the financial and foreign exchange markets closely, as the widening gap between benchmark interest rates in Korea and the US has put upward pressure on the exchange rate.