Since the coronavirus epidemic began, South Korea has become the first major Asian economy to hike interest rates.
The Bank of Korea raised its benchmark interest rate from 0.5 percent to 0.75 percent, a new low.
The measure aims to improve the country’s family debt and property prices, which have risen dramatically in recent months.
Central banks all around the world are attempting to strike a balance between the impact of ongoing Covid-19 infections and economic concerns like rising inflation.
The Bank of Korea has lifted its main interest rate for the first time in over three years.
The move comes as the central bank tries to strike a balance between assisting the country’s economic recovery and the concerns of growing debt and inflation.
Since May, policymakers in Asia’s fourth largest economy have indicated that they are prepared to raise borrowing costs.
Last month, the country was placed on a partial lockdown due to the current Covid-19 outbreak.
Central banks throughout the world are ready to begin unwinding pandemic-era policies, which included emergency stimulus measures introduced when economies were shut down to halt the spread of Covid-19.
So far this year, the majority of nations that have hiked borrowing costs have been emerging economies where inflation has accelerated as demand for goods and services has rebounded.
In Asia, Sri Lanka became the region’s first country to hike interest rates last week.
Last week, New Zealand was poised to become the first advanced country in the Asia-Pacific region to raise rates in the aftermath of the coronavirus outbreak.
Prime Minister Jacinda Ardern, on the other hand, enforced a countrywide lockdown the day before the monetary policy decision was revealed.
The Reserve Bank of New Zealand held its interest rate at a record low of 0.25 percent, citing “the Government’s implementation of Level 4 COVID limitations on activity across New Zealand” in a statement.