In an effort to rein in inflation and stem the decline of the Korean won, the Bank of Korea increased its policy rate to 3%, a move that was expected and marked by a 50 basis point increase.
The U.S. Federal Reserve’s three rate hikes of 75 basis points have boosted the dollar versus most other currencies, prompting authorities globally to consider the potential for further inflationary pressure and capital outflows. And since the beginning of the year, the won has dropped approximately 20% against the US dollar.
In September, inflation in South Korea was 5.6%, which was above the central bank’s target.
