Bank of Korea raises interest rate for fourth time since August

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South Korea’s central bank raised its key rate on Thursday, further strengthening its inflation-fighting policy.

The Bank of Korea raised its benchmark seven-day repurchase rate by 25 basis points to 1.5%, which was its fourth rate increase since August 2021.

The bank, which is awaiting Governor-designate Rhee Chang-yong’s inauguration after a confirmation hearing next week, signaled that stronger-than-expected price growth justifies more rate hikes later this year.

The bank acted faster than expected. The 20 analysts polled by The Wall Street Journal ahead of Thursday’s decision expected the bank to continue to tighten policy, but differed on the timing and pace. Some 13 predicted the next rate hike in May and the remaining seven were expecting it in April.

The bank is working to rein in soaring inflation, fueled by soaring commodity prices following global supply bottlenecks, the war in Ukraine and the era revival pandemic.

Headline consumer inflation in South Korea accelerated to 4.1% in March, the fastest pace in more than a decade, maintaining course to exceed earlier forecasts of 3.1% in March. the bank for 2022 and its annual target of 2.0%.

South Korea’s economy grew by 4.0% and its inflation rate averaged 2.5% in 2021.

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