Bank Of Korea Hikes Benchmark Lending Rate To 1.25%

The Monetary Policy Board of the Bank of Korea decided on Friday to raise the bank’s benchmark lending rate by 25 basis points, from 1.00 percent to 1.25 percent.

The move was widely expected and the second in as many meetings, and it lifts the bank’s lending rate to where it was in February 2020 – just before the pandemic hit and necessitated massive global stimulus.

Surging inflation was the main reason for the rate hike as consumer prices were up 3.7 percent on year and 0.2 percent on month in December. Core CPI, which strips out volatile food prices, advanced an annual 2.2 percent and was up 0.4 percent on month.

For all of 2021, overall consumer prices were up 2.5 percent, marking the highest annual inflation since 2011.

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