Korea: Central Bank raises interest rates
January 13, 2011
At the monetary policy meeting held on 13 January, the Bank of Korea (BoK) decided to raise the 7-day repurchase rate by 25 basis points from 2.50% to 2.75%. The move represents the third interest rate increase in the last seven months and follows on similar hikes in July and October last year. At the current level, the policy rate is at its highest level since January 2009. The BoK stated that consumer prices have risen in December on the back of rising prices for food and petroleum products. Going forward, the Central Bank expects inflationary pressures to persist and inflation expectations to rise, driven by the upswing in economic activity and rising international commodity prices. Against this backdrop, the BoK decided to raise the policy rate.
Author: Armando Ciccarelli, Head of Data Solutions