If the US Federal Reserve freezes interest rates, the Bank of Korea is likely to accelerate its monetary tightening pace. The Bank of Korea has already raised the base rate last month, and may raise it again in August depending on this month's inflation rate. As the United States is also expected to raise interest rates at least once this year, the interest rate gap between Korea and the United States is likely to narrow. The exchange rate is showing a downward trend due to the increase in the base rate and improvement in dollar supply and demand. However, concerns about financial imbalances such as rising housing prices and increasing household debt continue, raising the possibility of further interest rate hikes by the Bank of Korea.
