South Korea Central Bank raises interest rates for the first time in 3 years

The Central Bank of South Korea increased the policy rate for the first time in nearly three years. While South Korea is the first major Asian economy to end the monetary policy measures introduced during the pandemic, rising household debt in the country poses new threats to the economy.

The central bank's monetary policy board increased the policy rate by 25 basis points to 0.75 percent.

16 out of 30 analysts surveyed by Reuters expected a policy rate hike.

After the interest rate decision, the South Korean won appreciated, while the Kospi Index fell 0.6 percent to 3128.53 points.

Central bank officials have been signaling for rate hikes since May, but expectations for an increase have been dimmed recently due to the coronavirus cases that have been on the rise again.