Business News
Bank of Korea raises key interest rate to 2.5 per cent
Nov 16, 2010, 6:13 GMT
Seoul - South Korea's central bank on Tuesday raised its key interest rate by 0.25 percentage points to 2.5 per cent in an effort to ease inflationary pressure.
The benchmark seven-day repo rate was increased for the second time this year, from a record low of 2 per cent.
While inflation was expected to decrease somewhat, upward pressure was to continued due to the upswing in economic activity and rise in raw material prices, the Bank of Korea said.
Inflow of foreign capital led to an appreciation of the won, but the rate hike indicates that the bank is more concerned about rising prices. Consumer prices were up 4.1 per cent year-on-year in October, above the central bank's inflation target of 2 to 4 per cent.
The central bank said it would 'conduct monetary policy in such a way as to help the economy maintain price stability, while sustaining sound growth.'
Last month, the bank raised its economic growth forecast for 2010 from 5.9 per cent to 6 per cent.
'Looking ahead, the possibility of the heightened volatility of economic activity and exchange rates in major countries acting as a risk factor for the global economy cannot be ruled out,' the bank said in its economic outlook. dpa im se
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