The Korean Economic Forum
The Bank of Korea’s Policy Response during the High Inflation after COVID-19
Young Hwan Park (The Bank of Korea) and Chang Yong Rhee (The Bank of Korea)Year 2024Vol. 17No. 1
Like other major economies, Korea was faced with unexpected high inflation after the pandemic. In response, the Bank of Korea continued its tightening stance in order to stabilize inflation, including the most rapid and substantial series of policy rate hikes in history, moving from 0.5% to 3.5%. Throughout this process, the BOK encountered various policy challenges, such as a sharp currency depreciation and financial stress, from which the bank gained many valuable insights including policy cooperation with the government, labor market conditions, responses to currency depreciation, policy measures for financial stability, institutional improvements for financial stability, and policy communication.