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Economy

Bank of Korea chief signals rate hike coming despite COVID surge

Central bank holds benchmark at 0.5% but warns of side effects

Bank of Korea Gov. Lee Ju-yeol: He has warned that keeping interest rates too low for too long would risk side effects.   © Reuters

SEOUL -- The head of South Korea's central bank on Thursday signaled an interest rate increase is coming within this year, striking a note of caution about side effects from a prolonged loose monetary policy.

The Bank of Korea's seven-member policy board opted the same day to hold the benchmark rate steady at a record-low 0.5%, with one dissenting vote. But Gov. Lee Ju-yeol said keeping interest rates low for too long would worsen financial imbalances and undermine the country's growth base.

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