The Korea Herald


BOK to raise key rate by 0.75 percentage point this year: HSBC

By 양승진

Published : March 24, 2011 - 12:18

    • Link copied

   SEOUL, March 24 (Yonhap) -- South Korea's central bank is expected to hike its key interest rate by 0.75 percentage point this year to fight oil and commodity price gains, a senior economist at HSBC Holdings Plc. said Thursday.
   "South Korea's central bank may raise its interest rate 75 basis points further from where we are now through the course of this year," HSBC Group Chief Economist Stephen King said in a press meeting.
   In a bid to tame rising prices, the Bank of Korea (BOK) revised up its benchmark interest rate by 0.25 percentage point for March, bringing the rate to 3 percent from its record 2 percent kept during the global financial crisis.
   It was the second rate hike this year following the BOK's quarter percentage point hike conducted in January.
   The economist also forecast that Asia's fourth-largest economy may post 4.75 percent growth this year from the previous year, saying "the outlook is pretty healthy."
   Given the country's high dependence on imported foods and energy resources, South Korea is likely to face continued upward inflationary pressure, King noted.
   His comments came as the country is struggling to curb mounting consumer prices, led by agricultural and oil products.
   The country's consumer prices jumped 4.5 percent last month, compared with a year earlier, marking the biggest gain in 27 months after growing 4.1 percent in January.
   The price gains in the last two months exceeded the central bank's upper-end target of 4 percent.