Bank of Korea Raises Interest Rates to 2.5%


by NTDTelevision

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The Bank of Korea is raising interest rates to 2.5 percent. The governor of the bank says the G20 meeting has helped stabilize global currency markets and that further rate rises are possible.

South Korea's central bank raised interest rates Tuesday, and signals more hikes ahead by saying monetary policy is still accommodative.

The comments suggest Bank of Korea Governor Kim Choong-Soo is increasingly comfortable with tackling inflation, amid a firm recovery and expectations of solid growth.

[Kim Choong-soo, Governor, Bank of Korea]:
"After domestically and globally checking the financial and economic situation as a whole, the Monetary Policy Committee decided to raise interest rates by a quarter percentage point to 2.50 percent and operate the monetary policy accordingly."

Easing fears of a strong won was a factor, with Kim saying the G20 meeting had resulted in more stability in global currency markets.

Seoul is preparing G20-approved measures to head off potential speculative inflows of capital.

The 25 basis point hike is only the second time the BoK has lifted rates since the economic crisis ended, but analysts expect another rate hike early next year.

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