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The Korea Herald
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THE INVESTOR
March 29, 2024

Finance

Brokerages expect BOK to raise key rate in May

  • PUBLISHED :February 22, 2018 - 09:43
  • UPDATED :February 22, 2018 - 09:43
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[THE INVESTOR] Some Korean brokerages have forecast that the central bank will likely raise its key rate in May, as the US Federal Reserve is widely expected to mark up its base rate at a faster pace than anticipated, market watchers said on Feb. 22.

The Bank of Korea left its base rate steady at 1.5 percent last month, after raising the rate in November, the first increase in more than six years.

The BOK is likely to keep the rate unchanged next week, as Gov. Lee Ju-yeol’s four-year term ends on March 31.

If the Fed raises its key rate in March, the interest rate gap between Korea and the US will be reversed.

In a recent report, Hana Financial Investment Co. said the BOK may raise its key rate in April or May, citing a modest recovery in the global economy.

Kong Dong-rak, an analyst at Daishin Securities, said the Fed’s move may quicken the BOK’s pace, adding that the Korean central bank will probably take action in May.

“As central banks around the world are adjusting liquidity by ending their policy of monetary easing, the BOK has no choice but to take similar steps,” Kong said.

Shin Dong-soo, a researcher at Eugene Investment & Securities, echoed this view.

“It is difficult for the BOK to freeze its key rate at a time when the rate gap with the US is widening,” said Shin, who also predicted that the BOK may raise its key rate in May.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)

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