A Look at the Bank of Korea Base Rate Trend (2021~2024)
Just a personal note and summary. For the numbers, you only need the rough trend.
- 2021: After being cut to 0.75%, rate hikes began at the end of the year
- 2022: Fast-paced hikes, ending the year at 3.25%
- 2023: Raised to 3.50%, then a rate-freeze stance
- 2024: Cut expectations from H2, and actual cuts began
In the end, what I learned from this cycle is that rather than trying to get the direction of rates right, making my cash flow resilient comes first. Last year, I expected rate cuts and bought some long-term bonds, but as cuts were delayed longer than expected, I sat through a valuation loss for quite a while.
Now I've shifted to responding by adjusting my allocation instead of making predictions.
3 answers
For real, it really hit home that cash flow comes before predictions. I’ve also been burned twice trying to call interest rates lol
I also got into long-term bonds around the same time and spent over half a year looking at negative valuations. But what I learned then is that timing rate cuts is truly a matter of luck, while matching duration and maturity allocation to your own funding plan is a far more controllable part. Now I split my purchases across 3-, 5-, and 10-year maturities, and keep short-term funds in a parking account or MMF, which puts my mind much more at ease. I relate to the idea of switching from prediction to allocation adjustments.