South Korea's central bank on Friday raised the benchmark interest rate for the first time in 12 months as the bank was pressured to hike borrowing costs amid the massive household debts.
Bank of Korea (BOK) Governor Lee Ju-yeol and six other monetary policy board members decided to lift the seven-day repurchase rate to 1.75 percent from 1.50 percent.
It marked the first rate increase since the BOK hiked its target rate to 1.50 percent in November last year from an all-time low of 1.25 percent.
The rate hike was in line with market expectations. According to the Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 79 percent predicted a rate increase.
Two of the BOK monetary policy board members claimed a 25-basis-point rate hike during last month's rate-setting meeting.
Pressures had mounted on the BOK to tighten its monetary policy stance further amid the fast-growing household debts that topped 1,500 trillion won (1.34 trillion U.S. dollars).
Household debts grew at a faster pace than household income, pulling up housing prices as households rushed to purchase new home with borrowed money amid the prolonged low-rate trend.
The widening gap in policy rates between South Korea and the United States also encouraged the BOK to lift rates.
Bank of Korea (BOK) Governor Lee Ju-yeol and six other monetary policy board members decided to lift the seven-day repurchase rate to 1.75 percent from 1.50 percent.
It marked the first rate increase since the BOK hiked its target rate to 1.50 percent in November last year from an all-time low of 1.25 percent.
The rate hike was in line with market expectations. According to the Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 79 percent predicted a rate increase.
Two of the BOK monetary policy board members claimed a 25-basis-point rate hike during last month's rate-setting meeting.
Pressures had mounted on the BOK to tighten its monetary policy stance further amid the fast-growing household debts that topped 1,500 trillion won (1.34 trillion U.S. dollars).
Household debts grew at a faster pace than household income, pulling up housing prices as households rushed to purchase new home with borrowed money amid the prolonged low-rate trend.
The widening gap in policy rates between South Korea and the United States also encouraged the BOK to lift rates.
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