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Bank deposit and loan interest rates increase due to interest rate freeze

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Korean Banks Raise Rates: Rate Cut Hopes Diminish – What You Need to Know (Breaking News)

South Korean consumers are facing higher borrowing costs as commercial banks swiftly respond to a stalled expectation of interest rate cuts by the Bank of Korea (BoK). The move, impacting everything from savings accounts to mortgages, signals a shift in the country’s monetary landscape. This is a developing story with significant implications for the Korean economy and a key indicator for global financial watchers. We’re bringing you the latest, and what it means for you.

Deposit Rates Climb: A Win for Savers, But a Signal of Caution

Woori, Hana, and Kookmin banks – the nation’s largest lenders – have all recently increased deposit rates. Woori Bank boosted its ‘WON Plus deposits’ by 0.05 percentage points to 2.6%, while Hana Bank followed suit with its ‘Hana Term Deposit,’ marking its second increase this month. Kookmin Bank has seen even more substantial hikes, with a 0.5 percentage point increase twice in recent weeks, bringing rates to 2.55%. Internet banks, including Kakao Bank and K Bank, are also participating in the upward trend, offering rates up to 2.8% on free savings accounts.

This isn’t just about a few extra won in your savings account. The rise in deposit rates is a direct consequence of the BoK’s decision to freeze its base interest rate at 2.5% during its Monetary Policy Committee meeting on the 24th. The market had, until recently, anticipated at least one further rate cut before the end of the year. That expectation is now fading, pushing market interest rates higher and forcing banks to adjust their offerings.

Loan Rates Respond: Mortgage Holders Brace for Impact

The ripple effect is already being felt in the loan market. Kookmin Bank’s fixed mortgage rates have risen by 0.13 percentage points to 3.73-5.13%, and Shinhan Bank’s six-month financial bond credit loan rates have increased to 4.04-5.05%. Experts predict further increases are on the horizon, driven by rising indicators like the 5-year financial bond rate (AAA), which has climbed from 2.851% to 2.936% in the past month, and a 0.03 percentage point increase in Cofix to 2.52% – the first rise in a year.

Evergreen Insight: Understanding Cofix is crucial for Korean borrowers. Cofix, or Cost of Funds Index, is a benchmark interest rate used to calculate floating-rate loans. It reflects the average funding costs of banks, making it a key indicator of lending trends. Changes in Cofix directly impact the monthly payments for millions of Korean homeowners.

Why the Shift? A Deeper Look at the BoK’s Stance

The BoK’s Monetary Policy Committee is showing increasing hesitancy towards further rate cuts. While four out of six members still left the door open for potential cuts within the next three months, a shift in sentiment is evident. Just last August, five members favored a cut, but now only four do. This adjustment reflects growing concerns about external economic factors and a surprisingly resilient domestic economy.

Meritz Securities’ Yun Yeo-sam notes that the timing isn’t right for a cut. “It is not easy to implement an interest rate cut in November that was not implemented even when real estate prices were temporarily stabilized during the Monetary Policy Committee in August,” he stated. He points to uncertainties surrounding international trade negotiations (Korea-US and US-China) and the performance of the crucial semiconductor industry. However, he also acknowledges that expansionary fiscal policies and rising asset prices could bolster consumption, lessening the need for immediate monetary easing.

SEO Tip: For readers searching for “Korean financial news” or “Bank of Korea updates,” understanding these underlying economic factors is key. Archyde.com provides in-depth analysis to help you stay informed.

The situation is dynamic. The BoK is carefully balancing the need to support economic growth with the risks of fueling inflation or destabilizing the financial system. This delicate balancing act will continue to shape Korea’s monetary policy in the months to come.

Stay tuned to archyde.com for the latest updates on this developing story and expert analysis on the Korean economy. We’re committed to delivering breaking news and insightful commentary to help you navigate the complex world of finance.

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world

CBN Lowers Benchmark Rate to 27% in Major Policy Shift Following 2020 Pandemic Impact. Sullivan Urges Investors to Reevaluate Nigeria’s Investment Landscape

by Omar El Sayed - World Editor
written by Omar El Sayed - World Editor

Nigeria’s Central Bank Cuts Interest Rates for the Frist Time Since 2020

Abuja, Nigeria – in a landmark decision, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the benchmark interest rate for the first time since the onset of the Covid-19 pandemic in 2020. This action marks a cautious departure from its sustained hawkish monetary policy, reflecting improving economic indicators and a potential turning point in the nation’s financial landscape.

Key Policy Adjustments

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During its September 2025 meeting, the MPC lowered the Monetary Policy Rate (MPR) by 50 basis points, bringing it to 27 percent. Alongside this, the Cash reserve Ratio (CRR) for deposit money banks was adjusted downwards to 45 percent, from the previous 50 percent. The asymmetric corridor around the MPR was also narrowed to +250/-250 basis points,while the Liquidity Ratio remained stable at 30 percent,and the CRR for merchant banks stayed at 16 percent.

Signs of Economic Advancement

Economic analysts are viewing this as a “modest but symbolic step” largely driven by positive macroeconomic trends. Data shows that Nigeria’s inflation rate has decelerated for five consecutive months, reaching 20.1 percent in August. Together, the Nigerian naira has strengthened by 2.8 percent as July, trading at N1,488.26 to the US dollar. Moreover, oil production witnessed an increase, rising to 1.68 million barrels per day in the second quarter of 2025, up from 1.62 million barrels per day in the first quarter, contributing to a 4.2 percent year-on-year GDP growth.

“The decrease in the benchmark rate by 50 basis points is a symbolic move,signaling the first departure from prolonged aggressive tightening,” noted analysts at Afrinvest. “It demonstrates an acknowledgment that economic growth cannot be indefinitely hampered in the pursuit of controlling inflation.”

Impact on Borrowers and Investors

Even though the interest rate adjustment is unlikely to immediately translate into lower borrowing costs for businesses currently paying rates exceeding 30 percent, experts suggest it unequivocally signals the CBN’s gradual shift towards policies that foster economic expansion. The policy change indicates a growing confidence in the nation’s ability to manage inflationary pressures.

One significant aspect of the meeting was the introduction of a 75 percent CRR on non-Treasury Single Account (TSA) government deposits, including funds held by ministries, agencies, and local governments.This aims to curb speculative pressures and encourage banks to rely more on private sector deposits, addressing a long-standing issue of cheap funding sources and exchange rate volatility.

Afrinvest analysts predict that short-term yields may decrease, and the equity market could benefit from signals supporting growth. However, banks with ample government deposit exposure might face short-term challenges.

Key Policy Changes: A Comparison

Policy Previous Rate New Rate
Monetary Policy Rate (MPR) 27.5% 27%
Cash Reserve Ratio (CRR) – Deposit Money Banks 50% 45%
Asymmetric corridor +300/-300 basis points +250/-250 basis points

Analysts caution that Nigeria’s inflation is primarily driven by external factors like fluctuating exchange rates, the removal of fuel subsidies, disruptions in food supply, and elevated energy costs, rather than excessive domestic demand.

“Further rate increases would have been ill-advised,” they emphasized. “the true test lies in whether inflation continues to subside and the naira achieves sustained stability. Consistent policy direction,fiscal duty,and structural reforms are vital to ensure that this rate cut yields more than symbolic results.”

Bukola Bankole,a Partner and Corporate Finance Expert at TNP,echoed this sentiment,stating that while the cut demonstrates the Central Bank’s commitment to supporting economic growth,immediate relief for businesses with existing high-interest loans is unlikely.

Pro Tip: Keep a close watch on the CBN’s forward guidance in subsequent meetings for clues about the future trajectory of interest rates and monetary policy.

“Nigeria’s investment landscape remains appealing, even after this adjustment, as local instruments continue to offer attractive returns compared to those available in frontier and emerging markets,” Bankole explained. “The real measure of success will be the sustained easing of inflation and stability of the naira.”

Bankole further argued that addressing structural challenges-such as currency fluctuations, high energy costs, and food supply bottlenecks-is crucial. She believes that without these reforms, the rate cut might potentially be merely symbolic.

“If these supporting elements are in place, this modest cut could mark the beginning of a more sustainable policy framework that balances growth with price stability,” she concluded.

The MPC’s decision represents a delicate balance, aimed at promoting credit expansion and economic growth while maintaining control over liquidity to safeguard price and exchange rate stability.

Understanding Central Bank policy

Central bank policy decisions, such as adjusting interest rates and reserve requirements, are essential to managing a nation’s economy. These tools influence borrowing costs, inflation, and overall economic activity. A well-defined monetary policy is crucial for sustainable economic growth and stability.

The goal is often to find a balance between fostering economic growth by encouraging borrowing and investments and controlling inflation to protect the purchasing power of the currency. The specific approach taken by a central bank will depend on the unique economic challenges and opportunities facing the country.

Frequently Asked Questions

  • what is the Monetary Policy Rate (MPR)? The MPR is the benchmark interest rate at which the Central Bank lends money to commercial banks.
  • What is the Cash Reserve Ratio (CRR)? The CRR is the percentage of deposits that commercial banks are required to hold with the Central Bank.
  • What dose this rate cut mean for businesses? While not immediate, the cut signals a potential easing of borrowing conditions in the long term.
  • Is Nigeria’s inflation under control? Inflation is slowing down, but remains a significant challenge, driven by structural issues.
  • What is the Treasury Single Account (TSA)? The TSA is a unified fund account maintained by the Central Bank on behalf of the government.

What are your thoughts on the CBN’s decision? Do you believe this rate cut will effectively stimulate economic growth in Nigeria?


How might the CBN’s rate cut impact the profitability of Nigerian banks, and what adjustments might they need to make to their lending strategies?

CBN lowers Benchmark Rate to 27%: A New Era for Nigeria Investment?

The Landmark Rate Cut & Its rationale

In a notable move signaling a shift in monetary policy, the Central Bank of Nigeria (CBN) has reduced the benchmark interest rate to 27%. This decision, announced on October 5, 2025, marks a departure from the higher rates maintained in the wake of the 2020 pandemic and subsequent economic challenges. The primary goal is to stimulate economic activity, encourage lending, and ultimately foster lasting growth within the Nigerian economy.

for context, the CBN had previously held the Monetary Policy Rate (MPR) at 30% for an extended period, aiming to curb inflation and stabilize the Naira. However, recent economic data suggested a need for a more proactive approach to support recovery. Key factors influencing this decision include:

* Easing Inflation: While still present, inflationary pressures have shown signs of moderation in recent months.

* Global Economic trends: A more dovish stance from major central banks globally created space for Nigeria to adjust its monetary policy.

* Domestic Economic Indicators: Growth in key sectors like agriculture and manufacturing remained sluggish, necessitating intervention.

* Impact of Pandemic Recovery: The lingering effects of the 2020 pandemic on businesses and households required a supportive monetary surroundings.

Sullivan’s Call to Re-Evaluate Nigeria’s Investment Potential

Concurrent with the CBN’s proclamation, U.S. Secretary of State Antony Sullivan urged investors to reassess Nigeria’s investment landscape. Sullivan highlighted the potential for significant returns, particularly in sectors undergoing reform and modernization. His statement underscores a growing international confidence in Nigeria’s long-term economic prospects,despite recent challenges.

Sullivan specifically pointed to opportunities in:

* Fintech: nigeria’s burgeoning fintech sector is attracting significant investment and innovation.

* Renewable Energy: The country’s vast solar and wind resources present a compelling case for renewable energy projects.

* Infrastructure development: Significant investment is needed in infrastructure,including roads,railways,and power generation.

* Agriculture: Modernizing the agricultural sector offers substantial opportunities for increased productivity and export earnings.

He emphasized that the CBN’s rate cut,coupled with ongoing government reforms,creates a more favorable environment for foreign direct investment (FDI). This sentiment is echoed by analysts who believe the lower interest rates will reduce borrowing costs for businesses, encouraging expansion and job creation.

Implications for Investors: A Sector-by-sector Breakdown

The 27% benchmark rate has varying implications for different sectors of the nigerian economy. here’s a breakdown:

1. Banking & financial Services:

* Reduced Net Interest Margins: Lower interest rates will likely compress net interest margins for banks, potentially impacting profitability.

* Increased Lending: The expectation is that lower rates will stimulate loan demand from businesses and individuals.

* Fintech Growth: A more competitive lending environment could further accelerate the growth of fintech companies offering choice financing solutions.

2. Manufacturing:

* Lower Borrowing Costs: Manufacturers will benefit from reduced borrowing costs,enabling them to invest in expansion and modernization.

* Increased Production: Stimulated demand, coupled with lower financing costs, should lead to increased production levels.

* Import Substitution: A more competitive manufacturing sector can contribute to import substitution and reduce reliance on foreign goods.

3. Real estate:

* Potential for Increased Demand: Lower mortgage rates could boost demand for housing, particularly in the middle-income segment.

* Construction Activity: Increased demand for housing will likely stimulate construction activity and create jobs.

* Investment Opportunities: Real estate remains an attractive investment option, particularly in major cities like Lagos and Abuja.

4. Agriculture:

* Access to Finance: Lower interest rates will improve access to finance for farmers, enabling them to invest in improved seeds, fertilizers, and irrigation systems.

* Increased Productivity: Increased investment in agriculture should lead to higher yields and improved productivity.

* Export Potential: A more productive agricultural sector can boost export earnings and contribute to food security.

Navigating the Risks: Key Considerations for Investors

While the CBN’s rate cut and Sullivan’s endorsement present compelling investment opportunities, investors should be aware of potential risks:

* Exchange Rate Volatility: The Naira remains susceptible to exchange rate fluctuations, which can impact investment returns.

* Political Risk: Political instability and policy uncertainty remain concerns for investors.

* Infrastructure Deficits: Inadequate infrastructure, particularly power and transportation, can hinder business operations.

* Security Challenges: Security challenges in certain parts of the country pose a risk to investments.

* Regulatory Environment: Navigating the Nigerian regulatory environment can be complex and time-consuming.

Practical Tips for Investors in Nigeria (2025)

* Due Diligence: Conduct thorough due diligence before making any investment decisions.

* Local Partnerships: Partner with reputable local businesses to navigate the regulatory environment and gain market insights.

* Risk Management: Develop a complete risk management strategy to mitigate potential losses.

* Long-Term Perspective:

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Economy

RBI Pauses Rate Hike Amid Tariff and Growth Concerns

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

RBI Holds Rates, Cites Inflation Concerns – A Cautious Approach to Economic Growth

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Mumbai, India – The Reserve Bank of India (RBI) has opted to maintain its current interest rates, signaling a cautious stance amidst rising inflation and global economic uncertainties. This decision, announced today, reflects the central bank’s assessment that inflation is highly likely to remain above the 4% target in the coming quarters.

Speaking on the matter, former RBI Deputy Governor R. Gandhi emphasized the importance of the current inflationary outlook. “The Reserve Bank has taken due note of the fact that inflation is expected to remain above 4% in the fourth quarter of this fiscal and the first quarter of the next fiscal. This is a very important assessment at the moment,” he stated.

The RBI’s decision isn’t simply about potential inflation, though. concerns surrounding potential tariff increases and their broader impact on the Indian economy are also playing a key role. While acknowledging the importance of supporting economic growth and boosting credit expansion, the central bank is prioritizing price stability.

“While supporting growth is important and credit growth is not yet at the robust level we woudl like to see, the RBI has chosen to be cautious,” Gandhi explained. “That’s because inflation will – not just could – rise in the fourth and first quarters.”

This pause in rate adjustments underscores the Monetary Policy Commitee’s (MPC) commitment to a neutral stance, allowing for flexibility to respond to evolving economic data. The RBI remains prepared to adjust policy in either direction as new facts becomes available.

Understanding the RBI’s Balancing Act

The RBI’s current approach highlights a fundamental challenge for central banks globally: balancing the need to foster economic growth with the imperative to control inflation.Maintaining price stability is crucial for long-term economic health, as unchecked inflation erodes purchasing power and creates uncertainty for businesses and consumers.

The Significance of a ‘Neutral’ Stance

A neutral monetary policy stance is a deliberate strategy. It allows the RBI to avoid prematurely tightening policy – which could stifle growth – or loosening policy – which could exacerbate inflationary pressures. This approach provides the central bank with the agility to react to unforeseen economic developments.

Looking Ahead: What to Expect

Investors and economists will be closely monitoring key economic indicators, including inflation data, global commodity prices, and government policy decisions, to gauge the future trajectory of the RBI’s monetary policy. The central bank’s next move will likely depend on whether inflationary pressures subside or persist, and how effectively the government addresses potential economic headwinds.The RBI’s commitment to data-driven decision-making suggests a pragmatic approach to navigating the complex economic landscape.

How might the RBI’s pause in rate hikes affect long-term investment in India?

RBI Pauses Rate Hike Amid Tariff and Growth Concerns

Navigating economic Headwinds: RBI’s Stance on Interest Rates

The Reserve Bank of India (RBI) has signaled a pause in its interest rate hikes, a notable shift in monetary policy driven by a complex interplay of factors. While inflation remains a concern, slowing global growth and the impact of evolving tariff structures are weighing heavily on the decision-making process. this article delves into the reasons behind the RBI’s cautious approach, analyzing the current economic landscape and potential implications for businesses and consumers. Key areas of focus include indian monetary policy, RBI interest rates, economic growth India, and inflation control India.

The Global Economic Slowdown & Its Impact on India

Global economic growth is decelerating, fueled by geopolitical tensions, supply chain disruptions, and tightening financial conditions. This slowdown directly impacts India through reduced export demand and increased volatility in financial markets.

Reduced Export Revenue: Lower demand from key trading partners like the US and Europe is impacting India’s export sector,a crucial contributor to GDP growth.

Financial Market Volatility: Global uncertainty leads to capital outflows from emerging markets like India, putting pressure on the Rupee and increasing borrowing costs.

commodity Price Fluctuations: the global slowdown affects commodity prices, impacting India’s import bill and contributing to inflationary pressures.

These factors necessitate a careful balancing act for the RBI, prioritizing stability over aggressive rate hikes. Understanding global economic trends and thier effect on Indian economy is crucial.

Tariff implications and domestic Inflation

Recent tariff adjustments, both domestically and internationally, are adding to inflationary pressures. Increased import duties on certain goods, while intended to protect domestic industries, can lead to higher prices for consumers and businesses.

Cost-Push Inflation: Tariffs increase the cost of imported raw materials and intermediate goods, leading to cost-push inflation.

Supply Chain Disruptions: Tariffs can disrupt supply chains, leading to shortages and further price increases.

Impact on Manufacturing: While tariffs aim to boost domestic manufacturing, they can also increase costs for manufacturers who rely on imported inputs.

The RBI is closely monitoring these developments, recognizing that addressing tariff-related inflation requires a nuanced approach. The central bank is also evaluating the effectiveness of existing inflation management strategies.

RBI’s Recent Actions and Forward Guidance

Despite pausing rate hikes, the RBI remains committed to its inflation target of 4%. Recent actions demonstrate this commitment:

  1. Liquidity Management: The RBI is actively managing liquidity in the banking system to ensure adequate credit flow while preventing excessive money supply growth.
  2. Foreign exchange intervention: The RBI has intervened in the foreign exchange market to stabilize the Rupee and prevent excessive depreciation.
  3. Focus on Core Inflation: The RBI is paying close attention to core inflation, which excludes volatile food and fuel prices, to gauge underlying inflationary pressures.

The RBI’s forward guidance suggests a data-dependent approach, meaning future policy decisions will be based on incoming economic data. Monitoring RBI policy statements and economic indicators India will be vital for investors and businesses.

Raiffeisen bank International AG and Potential Implications

Recent news regarding Raiffeisen Bank International AG (RBI) and the anticipated realization of EUR 1.2 billion from the enforcement of claims against Rasperia Trading Limited in Q2 2025 could have indirect implications for global financial flows. While not directly impacting Indian monetary policy,significant financial movements stemming from such events are monitored by central banks worldwide for potential systemic risks. https://www.rbinternational.com/de/raiffeisen.html This highlights the interconnectedness of the global financial system and the RBI’s need to remain vigilant.

Sector-specific Impacts: A Closer Look

The pause in rate hikes will have varying impacts across different sectors of the Indian economy:

Real Estate: A pause in rate hikes is positive for the real estate sector, as it reduces borrowing costs for homebuyers and developers.

Automobile Industry: Lower interest rates can stimulate demand for automobiles, especially those financed through loans.

Manufacturing: While tariffs pose challenges, a stable interest rate habitat can support investment and expansion in the manufacturing sector.

Financial Services: Banks and financial institutions may see slower growth in net interest margins but benefit from increased credit demand.

Analyzing sectoral economic outlook India is crucial for understanding the broader impact of the RBI’s policy decisions.

Benefits of a Paused Rate Hike Cycle

A pause in rate hikes offers several potential benefits:

Supports Economic Growth: Lower borrowing costs can stimulate investment and consumption, boosting economic growth.

Reduces Debt Burden: A stable interest rate environment reduces the debt burden for businesses and households.

Encourages Investment: Lower borrowing costs encourage businesses to invest in new projects and expand operations.

Stabilizes Financial Markets: A predictable monetary policy environment can stabilize financial markets and reduce volatility.

Practical Tips for Businesses and Consumers

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