Bank of Korea Announces Surprise Interest Rate Hike

South Korea’s central bank surprised markets with an interest rate hike Thursday as it moves to contain inflationary pressures.

Economists are expecting the Bank of Korea to raise rates as many as five times this year, but most did not see a move until February.

BoK governor Kim Choong-soo raised rates to 2.75 percent, confirming forecasts of inflation at the higher end of the official two to four percent range.

[Kim Choong-soo, Governor, Bank of Korea]:
„With the rising price of the international raw materials, we expect our consumer prices to keep rising up to the middle or latter half of 3 percent and we also expect inflation expectations to rise.“

Some analysts even see inflation topping four percent this year.

The hike comes alongside price control measures unveiled separately Thursday, including a cut in import tariffs on items like fish and powdered milk, and a freeze on electricity rates and transport fares.

The government also vowed tougher punishment for price manipulators as well.

Foto: NTDTV