Korea’s central bank has raised key interest rates, signaling it will tighten its policy further as it continues its fight against inflation.
The Bank of Korea raised its seven-day repurchase rate by 25 basis points to 1.75%, while in April it had a similar increase.
The fifth increase in interest rates since August 2021, was in line with analysts’ estimates, which had forecast an increase of 0.25%.
The bank sharply upgraded its inflation forecast for 2022 to signal more interest rate hikes and cut growth prospects.
The central bank expects inflation to average 4.5% in 2022, higher than the February forecast of 3.1%.
He expects GDP to grow by 2.7% this year, compared to a previous estimate of 3% growth.
South Korea’s economy grew by 4% in 2021.
Rising commodity prices due to global supply chain problems exacerbated by the war in Ukraine and stimulus policies have contributed to the rapid rise in prices.
Inflation in South Korea hit a 13-year high in April, when the consumer price index stood at 4.8% from a year earlier, well above the annual target of 2%.
Source: Capital
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