S.Korea c.bank should consider housing costs in inflation index, says board member

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SEOUL, Sep 29 (Businesshala) – The time has come to review the inflation index to include rising housing costs as the board tightens monetary policy, one of six board members of South Korea’s central bank said on Wednesday. considers doing.

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Speaking at the Korea Chamber of Commerce and Industry in Seoul, Suh Young-kyung said the current policy interest rate is still adjusted and the board will need to “decide on the timing and pace of further interest rate hikes.”

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In this process, one of the factors the central bank must consider includes factoring in rising housing costs into the consumer price index.

Suh said in his speech, “As house prices have been rising since the outbreak of COVID-19, the number of cases is increasing, including by the ECB, New Zealand, Norway, etc., where they explicitly consider housing prices.” We do.” A copy of which was made available to the media.

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“We, too, need an active discussion on this.”

The Bank of Korea raised its policy rate by 25 basis points to 0.75% in August, the first increase in nearly three years and the first major Asian central bank to move away from pandemic-era monetary stimulus.

The move is aimed at curbing record-high home debt and rising property prices that have become a risk to the economy. Apartment prices in the capital region around Seoul, home to nearly half the country’s population, rose 13.11% since August this year.

Analysts expect BoK to hike rates in the coming weeks or next year, with most seeing a base rate of 1.25% by the end of 2022.

Reporting by Cynthia Kim; Editing by Jacqueline Wong

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