Korea uses several reference rates that together can indicate trends in official monetary policy:

Policy Rate

In March 2008, the Bank of Korea (BOK) decided to adopt a new benchmark interest rate replacing the target overnight (uncollaterized) call rate used for interbank borrowings with the 7-day repurchase agreement (RP) rate termed ‘Bank of Korea Base Rate’ (the Base Rate). The Base Rate will serve as the rate for the 7-day RP and the minimum bid rate for 7-day reverse repos in the open market operations.

Further details on the implementation of Korea’s new monetary policy stance are explained on the BOK link below.

Short-term Interest Rate

The yield on 3-month certificates of deposit (CDs) is one of the most widely quoted short-term interest rates used by banks to charge corporate customers. The Korea Interbank Offered Rate (KORIBOR), launched July 2004, is fixed by taking the average of the middle 8 of 14 quotes from contributing banks. KORIBOR is published daily for maturities ranging from one week to 12-months by Yonhap News Agency and the Korea Federation of Banks.

Medium and Long-term Interest Rate

One-year Monetary Stabilization Bonds (MSBs) and 3-year treasury bond yields are benchmarks for medium- and long-term interest rates, respectively. The yields on MSBs and treasury bonds provide signals of market’s liquidity and direction of monetary policy.