The financial authorities have raised the benchmark interest rate again. The base interest rate, which fell to the 0% range last year amid the coronavirus, has risen to the 1% level again for the first time in 1 year and 8 months. Those who borrowed from the bank have a higher interest burden, but this is not the end, and it is likely to rise further in the first half of next year.
This is the first news reporter Jang Hoon-kyung.
As the background of ending the era of ultra-low interest rates in the 0% range, the Bank of Korea heard the domestic economy’s good recovery and steep inflation.
In addition to the rise in the price of raw materials such as international oil prices, consumption demand is increasing due to daily recovery and the disruption of the global supply chain is prolonged, the BOK said.
The consumer price inflation forecast is also 2.3% this year and 2% next year, emphasizing the need to raise interest rates by 0.2%p and 0.5%p, respectively, from the forecast just three months ago.
The Bank of Korea did not deny the prospect of further hikes in the first half of next year, even after raising the interest rate by 0.5%p twice since August.
[이주열/한국은행 총재 : 물가 흐름에 비춰볼 때 (기준금리는) 여전히 완화적인 수준이라고 말씀드릴 수 있습니다. 1/4분기 인상을 저희들은 배제할 필요는 없다고 봅니다.]
The interest burden for those with large loans is bound to increase.
Even during the same period of rising interest rates, households in major countries reduced their debts by repaying their principal, while Korea’s household debt continued to record highs.
The Bank of Korea predicted that the annual interest burden of households would increase by 5.8 trillion won compared to the end of last year due to successive interest rate hikes.
[김상봉/한성대 경제학과 교수 : 최소한으로 (대출을) 내시는 게 좋을 것 같아요, 본인이 감당할 수 있는 수준만큼 기존 대출자들도 (일부 원금을) 상환하는 게….]
In the midst of this, some banks announced an increase in the interest rate on deposits and savings accounts, conscious of the financial authorities’ unfavorable views on the difference in interest rates between deposits and savings accounts.
(Video editing: Lee Seung-yeol)
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