South Korea’s central bank raised its key interest rate for the first time in more than three years, aiming to tighten monetary policy to curb inflation amid the intensifying conflict in West Asia.
Following a monetary policy meeting, the Bank of Korea raised its benchmark policy rate by 0.25 percentage points, from 2.5 per cent to 2.75 per cent. This is the first rate hike since January 2023.
Consumer price inflation exceeded 3 per cent in May and June this year, remaining above the Bank’s 2 per cent target.
Bank of Korea Governor Shin Hyun Song said all seven members of the Monetary Policy Committee supported the rate hike, stressing that it was necessary in view of trends in economic growth, consumer prices and financial stability.