Azernews.Az

By Alimat Aliyeva

South Korea’s money supply increased for the fifth consecutive month in March, despite declining expectations for further interest rate cuts, according to data released Wednesday by the Bank of Korea (BOK), AzerNEWS reports, citing foreign media.

Seasonally adjusted M2 — a broad measure of money supply — rose by 0.4% compared with the previous month, reaching 4,132.1 trillion won (approximately $2.77 trillion). The indicator has continued to grow steadily since November 2025.

Analysts say expectations for additional monetary easing weakened amid strong semiconductor export performance and rising inflationary pressure linked to tensions in the Middle East. Higher energy prices and supply chain concerns have contributed to uncertainty in global markets, influencing South Korea’s monetary outlook.

Earlier this year, the Bank of Korea kept its benchmark interest rate unchanged at 2.50% after implementing two 25-basis-point rate cuts in February and May 2025.

Meanwhile, M1 — a narrower measure of money supply — increased by 0.7% in March compared to the previous month, accelerating from February’s modest 0.1% growth.

M1 includes cash in circulation, demand deposits, and other highly liquid funds, while M2 additionally covers money market funds, time deposits, and short-term financial instruments with maturities of less than two years.

Economists note that continued growth in liquidity may support domestic consumption and investment, but could also complicate the central bank’s efforts to keep inflation under control if global energy prices continue to rise.