Korea–US rate gap chart: history and current policy rates

Saved South Korea and US rates, with both gaps

Interest is the extra money paid for borrowing or received for keeping savings. An interest rate compares that amount with the starting money over a stated time. A difference between two such percentage numbers can be calculated without knowing the number of dollars or won in anyone’s personal account.

The rates in the table are set by central banks, institutions that use tools such as rates to influence rising prices and how much people borrow and spend. These are policy settings rather than rates offered on a personal account. Read the rate names, dates and check notices alongside the figures. The table uses the homepage’s saved data, with a separate source date and successful check time for each side. If either figure lacks current confirmation, a current gap cannot be calculated.

The US target range has a lower and an upper end. Adding those ends and dividing by two gives the comparison midpoint. The next section uses one invented range to show the subtraction.

Collection runs twice daily. A failed collection retains the last successful figure and its actual check time. The homepage uses the US comparison midpoint, so its result can differ from an upper-bound comparison. Collection and verification notes

Open the South Korea–US comparison →

Why can the same two countries produce two answers?

South Korea’s side uses one number, the Bank of Korea Base Rate. The Bank of Korea describes it as a policy reference used in dealings with financial institutions. The US Federal Reserve’s policy committee instead chooses a range with a lower and an upper end. The upper bound is the top end. The midpoint is the average: add the two ends and divide by two. A single gap needs one of those US numbers.

Here the calculation is US figure − South Korean Base Rate. A + sign means the chosen US number is higher; a − sign means the Korean number is higher. The difference between two percentage rates is measured in percentage points, shortened to pp. Subtracting 3.00% from 3.75%, for example, gives 0.75 pp.

The homepage's comparison tool subtracts the second selected country from the first. Select South Korea first and the sign will run the other way. That changes the direction of the subtraction, not the underlying rates.

Take a hypothetical Korean rate of 3.00% and a hypothetical US range of 3.50–3.75%. These figures are for the example; the saved rates are in the table above. The two calculations are:

The range is 0.25 percentage points wide, so its upper bound sits 0.125 percentage points above its midpoint. Subtracting the same Korean rate leaves that distance intact.

Keep the original precision until the final display: rounding 3.625% to 3.63% before subtracting would give 0.63 rather than 0.625 percentage points.

The midpoint does not measure actual borrowing

The Fed chooses the two ends of the range for policy. We average those ends to obtain one number for map colours and comparisons. That midpoint is a calculation, rather than a promise that an individual can save or borrow at that rate. The Fed’s official rate history records its policy targets and ranges, separately from measures drawn from actual trades.

The effective federal funds rate, or EFFR, is a separate statistic drawn from reported overnight transactions: money borrowed until the next day. The New York Fed's methodology uses a median weighted by transaction volume. That means finding the middle rate while taking the amount borrowed in each transaction into account. The target-range midpoint uses only two policy boundaries. Similar values on a particular day do not make these the same measure.

FURRY RATES displays the US range first, followed by its comparison midpoint. The table in this article also includes an upper-bound gap, a measure used in Korean news. Both calculations are valid when labelled clearly. A table using EFFR compares a different rate.

A midpoint alone cannot tell you the original range: many pairs of numbers have the same average. If the source does not supply the bounds, the site leaves them blank. It does not substitute zero or assume a familiar range width.

Read the rate date and check time separately

A decision date tells you when the central bank decided. An effective date tells you when that decision starts to apply. An observation date is when a value is recorded in a series, meaning a set of figures listed over time. The source-check time tells you when this site successfully read the source. Each date answers a different question, so they can all differ.

The BIS series currently used for South Korea and the US API both supply observation dates. Their publication schedules differ, so those dates need not match. Neither date identifies the central bank's decision or last rate change. An unchanged rate can appear on several observation dates.

An old effective date can still describe the current rate if recent official material confirms that it remains in place.

If the site read a source yesterday but cannot reach it tonight, the last successful check remains yesterday. The saved figure keeps that timestamp and gains a delay warning. Manually checked records also keep the date they were actually checked; an automatic run does not change it.

A new decision may take effect later. Suppose, for example, an announcement on the 10th says the new rate applies from the 12th. A current-rate comparison on the 11th still uses the old rate. For an actual decision, the announcement supplies the dates and local effective time.

Different observation dates do not necessarily mean the comparison is wrong; a rate can remain unchanged between them. But to calculate the gap on a particular past date, you need the rates that applied in both countries on that date. Subtracting today's saved figures cannot recover that history.

A narrower gap can come from either country

Return to the hypothetical figures. If Korea raises its rate from 3.00% to 3.25% while the US range stays put, the upper-bound gap falls from 0.75 to 0.50 percentage points. A US cut with Korea unchanged can narrow it too. The same description, “a narrower gap,” can refer to different policy actions.

Keep the US measure fixed when comparing dates. An upper-bound gap on Monday and a midpoint gap on Tuesday do not measure the same thing. The second can be smaller even when neither central bank has changed its rate.

This policy-rate difference is not the difference between the returns on won and dollar savings accounts. Those products have their own rates, terms, taxes and fees. A won-based saver who buys a dollar asset and later converts back to won also faces an exchange-rate calculation. A positive policy-rate gap does not guarantee a positive return.

The guide to interest rates and exchange rates works through currency conversion separately. The figures here do not forecast the next central-bank decision or the direction of the won. Forecast rate changes are kept out of the current-rate calculation.

When a headline gives a different answer

A headline could report +0.75 percentage points while the homepage, with South Korea selected first, shows −0.625. In the hypothetical example, both follow from the same inputs: the headline subtracts Korea from the US upper bound; the homepage subtracts the US midpoint from Korea.

Check which US rate is being used first. Then check whether the calculation uses the top of the range or its midpoint, and which country is subtracted from which. If those agree, compare source dates and successful checks. Right after a policy announcement, one source may have updated while another still carries the previous setting. If a difference remains, send an error report (Korean) with the two original links and the comparison time.

The unit can explain another apparent disagreement. Subtracting 3.00% from 3.75% gives 0.75 percentage points. A basis point is one hundredth of a percentage point, so the same gap is 75 basis points. But asking how much larger 3.75 is compared with 3.00 gives 0.75 ÷ 3.00 = 25%. That answers a different question. The site uses percentage points to show the distance between the rate numbers.

Sources and assumptions

• BIS: month-end policy-rate coverage and publication schedule
• BIS: definitions of Korea's Base Rate and the US target-rate midpoint
• Bank of Korea: Base Rate
• Federal Reserve: target-rate history
• New York Fed: EFFR methodology
• New York Fed Markets Data API

FURRY RATES calculates the midpoint and Korea–US gaps from the saved inputs. They are not New York Fed gap statistics or endorsed calculations. The saved source metadata and collection methodology explain dates and reuse conditions.

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