It's time for On Point, where we speak to various experts to dig deeper into the biggest news stories in the spotlight right now.
As widely expected Tuesday, South Korea's central bank froze the benchmark interest rate at point-seven-five percent, but left strong hints it might be hiked next month in a bid to tackle inflation.
The Bank of Korea raised the rate by a quarter percentage point from a record low of half-a-percent in August so we could see a series of rapid rate hikes.
Such a move would put extra pressure on families already saddled with a lot of household debt, an issue which has long been a thorn in the side of the South Korean economy.
For a closer look, we connect to Steven Borowiec(bo-row-ik). Steven is a writer, journalist and broadcaster based in Seoul.
Steven, thanks for joining us.
We keep hearing the economy is recovering thanks to strong exports, but in day-to-day life, this have little bearing on most people and many are struggling due to the virus restrictions, inflation and dwindling spending. Do you think the BOK has the tools - through its policies - to help the regular person and what impact would another rate hike so soon after the last have on heavily-indebted households?
Like many countries at the moment, South Korea is dealing with high inflation, billions of dollars have been injected into the pandemic-hit economy, but this has had the predictable effect of causing prices to rise sharply, while people’s salaries - for the most part - remain flat. In your view, is it time for officials to make a decision on lifting the virus restrictions to give small businesses a chance of getting through this?
Turning to the market reaction to the BOK's rate freeze decision Tuesday. South Korea’s benchmark KOSPI didn't seem to like it, with blue chips like Samsung Electronics, SK Hynix, Kakao and Naver all falling sharply. How much do you attribute this at the BOK’s decision… or is it reflective of a wider issue?
And finally, you could argue the Federal Reserve is having the same affect on global markets as the pandemic right now. Firstly, do you think the Fed - as widely expected - will announce it will start of tapering from November… and if it does, what will that mean for smaller markets like South Korea’s?
Ok, Steven, thanks for joining us this morning. Let’s hope there’s some light at the end of the tunnel
That was Steven Borowiec(bo-row-ik) a Seoul-based journalist, on the BOK’s rate freeze decision and the ongoing economic uncertainties in Korea and around the world.