Why the Bank of England's governor will be closely watching South Korea, Australia, and New Zealand

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Sky's Ian King explains why the Bank of England's governor will be closely watching South Korea, Australia, and New Zealand 👇

And, as in Britain, South Korea's recovery from the pandemic appears to be stalling. Growth has been sputtering and South Korea's economy has been particularly affected by renewed COVID restrictions in China, the country's largest export market.

The BOK's monetary policy board said today:"The board judges that a pre-emptive policy response to prevent the entrenchment of high inflation is of greater importance for some time as high inflation is continuing and becoming broad-based while short-term inflation expectations are rising sharply, although economic downside risks have increased at home and abroad."

By contrast, the RBNZ appears to be well ahead of the curve, in the jargon. The RBNZ, as with the BOK, began raising interest rates in October last year and it has taken them to a higher level than either Australia or the UK. Since October last year, the RBNZ has taken its main policy rate from 0.25% to 2.5% today. The Bank of England, having moved from 0.1% in December to just 1% today, looks pedestrian by comparison - even though, proportionately, the two have raised rates by the same amount.

And Sean Keane, chief economist at ANZ New Zealand, wrote recently in the New Zealand Herald:"Governor Orr's inner raptor has now been discovered and his talons are now clearly visible.

 

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