• BOK Raises Key Rate To 1% To Fight Inflation, Household Debt
Bank of Korea Governor Lee Ju-yeol (Photo: Yonhap)

The Bank of Korea has raised its key policy rate by 0.25 percentage point to 1 percent to fight inflation and fast-rising household debt.

Thursday's hike was widely expected, and puts an end to 20 months of the policy rate staying in the zero range.

The central bank slashed it by a half percentage point to 0.75 percent in March last year, then trimmed it again two months later to an all-time low of 0.5 percent, where it stayed until August this year.

The BOK also decided to keep its 2021 growth outlook at 4 percent, while predicting a 3 percent advance in 2022, unchanged from its earlier projections.

However, it revised up its inflation outlook for this year to 2.3 percent.

Despite signs of economic recovery driven by strong exports, concerns remain and market watchers think the central bank might raise the interest rate again, at least once, in the first half of next year.

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