S. Korean central bank raises rate to 2.5 percent

By ASSOCIATED PRESS
November 16, 2010 14:38

SEOUL, South Korea  — South Korea raised its key interest rate Tuesday for the second time in four months as higher inflation forces Asian central banks to increase borrowing costs.

The Bank of Korea lifted the benchmark seven-day repurchase rate to 2.5 percent from 2.25% at a monthly monetary policy meeting after inflation hit 4.1% in October.The bank also removed the wording "under the accommodating policy stance" from its statement, suggesting that interest rates will continue to rise to more normal levels after two years of super-low borrowing costs.

Asian countries are under increased pressure to contain inflation after their economies rebounded strongly from the global recession and as food prices surge.


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