South Korea Hikes Interest Rates

The Bank of Korea has raised the benchmark rate by 0.25 percentage point to 2.5% in a move to tame inflationary pressures, reports the Wall Street Journal.


According to the Journal, inflationary pressures in South Korea have increased as exports and domestic consumption have grown robustly. Consumer prices rose 4.1% in October from a year earlier, surpassing the central bank's 2%-4% inflation target for the first time since February 2009.


In a statement obtained by the Journal, the central bank says that its policy will aim for price stability, dropping the phrase that it was "keeping an accommodative stance." That suggests the monetary tightening may continue until the base rate returns to "normal" levels seen before the global economic crisis, notes the Journal.


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