SEOUL, Aug 27 — The Bank of Korea must keep raising interest rates until inflation is in decline, but the central bank likely could not halt its tightening before the US Federal Reserve, Governor Rhee Chang-yong said on Saturday.
Asia’s fourth-largest economy has been in the vanguard of global tightening. The BOK was among the first central banks to abandon pandemic-era monetary stimulus, raising its key policy rate by 2 percentage points since August last year to 2.5 per cent. Although the BOK began raising interest rates before the Fed, with its first hike coming a year ago, “whether we can end earlier — I don’t think so.”“If you ask me, whether I’m going to stop ... what happens if the oil price increases again?” he said. “It’s very hard for us to know the exact timing, given the importance of the external shock.”
At Jackson Hole, central bankers used largely the same language to describe their battle against rising prices. Though the headline problem is the same — inflation far above their established targets — the sources of price pressure and therefore the policy responses differ among countries. The won, one of Asia’s worst-performing currencies, has dropped about 11 per cent against the dollar this year, and local officials have stepped up surveillance of the currency’s movements.