Bank of Korea Raises Interest Rates to Fight Inflation

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The South Korean central bank today raised its key interest rate by 0.25% to 1.25%, its highest level since March. In doing so, it aims to curb rising inflation and household debt.

According to South Korea’s Consumer Price Index (CPI), inflation rose 2.5% in 2021, a rapid increase from just 0.5% in 2020, as energy costs and agricultural prices soared. This suggests that South Korea is facing inflationary pressures at a time when the economy is recovering.

The South Korean central bank decided to raise interest rates around the same time that the Federal Reserve (Fed) also announced a rate hike this year. Now that inflation in the United States has skyrocketed.

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