(Seoul=NSP NEWS) = Bank of Korea Governor Shin Hyun-song emphasized that raising the base interest rate for two consecutive months is a preemptive measure to respond before the upward trend in prices spreads.

According to the Bank of Korea on August 27, the Monetary Policy Committee held a meeting to decide on the direction of monetary policy at the Bank of Korea headquarters in Jung-gu, Seoul, and raised the base interest rate by 0.25 percentage points from 2.75% to 3.00%.

At a press conference, Governor Shin cited inflation, growth, exchange rates, and financial stability as the reasons for the rate hike.

He said, “We judged that by responding early before inflation spread, we could ultimately reduce the costs the economy would have to bear,” adding, “We took preemptive action to avoid having to use a shovel to fix what could have been fixed with a hoe.”

The upward revision of forecasts also served as a basis. The Bank of Korea significantly raised its growth forecast for this year to 3.3% and for next year to 2.9%, and also raised its forecast for core inflation. This assessment is based on the judgment that underlying inflationary pressures are likely to persist as income conditions improve and strong growth continues.

The future path left open the possibility of one additional hike. However, the timing was not fixed.

It presented price trends as the criterion for future judgment. It explained that it would look at prices in August and September, as well as nominal gross domestic product(GDP), income-related indicators, sentiment indices, and business sentiment.