The Bank of Korea is expected to raise interest rates this week for the first time in over three years.

BlockBeats News, July 14th, according to foreign media reports, economists expect the Bank of Korea to raise interest rates for the first time in over three years on Thursday and raise rates again before the end of the year. South Korea's June inflation rate rose to 3.2%, reaching a two-and-a-half-year high, higher than the Bank of Korea's 2% target for the fourth consecutive month. It is expected that the average inflation rate in the second half of this year will be around 3%, paving the way for the start of a tightening cycle. Strong economic growth, rising house prices, and high household debt have provided policymakers with room to tighten policy.

South Korea's economy grew at its fastest pace in nearly six years in the first quarter. Bank of Korea Governor Lee Ju-yeol stated that due to the surge in oil prices caused by the Middle East conflict, inflation is expected to remain above the Bank of Korea's target for a considerable period of time, hence the need for a rate hike. In a survey conducted from July 7th to 13th, of the 37 economists, all but one expected the Bank of Korea to raise the base rate to 2.75% on July 16th. Most of the surveyed economists (28 out of 31) expect another rate hike by the end of the fourth quarter, bringing the policy rate to 3.00%. One of them predicted the base rate to reach 3.25%, while the other two forecasted it to remain at 2.75%. The median forecast indicates that the Bank of Korea will raise the base rate to 3.25% in the first quarter of 2027 and maintain that level at least until the end of next year, which is 25 basis points higher than the forecast in May.