Bank of Korea (BOK) Gov. Rhee Chang-yong speaks during a press conference at the central bank in Seoul, Aug. 24, after the bank decided to hold its key interest rate steady at 3.5 percent for the fifth straight time. Joint Press Corps
The Bank of Korea (BOK) is expected to begin cutting its key interest rate in the third quarter of next year due to uncertainties over high inflation and the U.S. monetary policy, a report showed Tuesday.
The BOK was initially expected to begin lowering its key rate early next year, but the rate-cutting cycle is now expected to start later than that, Kim Ji-man, a senior analyst at Samsung Securities, said in the report.
In August, the BOK maintained its key interest rate steady at 3.5 percent for the fifth straight time following seven consecutive rate hikes from April 2022 to January 2023.
Kim attributed the possible delay in the BOK's rate cut to the sticky inflation situation here and the United States' monetary tightening policy, which will likely keep the Federal Reserve's benchmark rate "higher for longer."
Last week, the Fed decided to keep its benchmark lending rate unchanged at between 5.25 percent and 5.50 percent but raised the possibility of another rate hike later this year to bring inflation down to its 2 percent target.
"We cannot rule out the possibility of the U.S. Fed's additional rate hike in November or December, and the increase in Korea's consumer price index (CPI) will inevitably climb to the 4 percent mark by the end of this year," Kim said.
"The increase rate of the CPI will likely not fall below 3 percent in the first half of next year and the core inflation rate will go down but at a slow pace," Kim said. (Yonhap)
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