BOK Hints at Additional Rate Hike

By Na Jeong-ju

Staff Reporter

The Bank of Korea (BOK) Thursday raised its benchmark short-term interest rate by 25 basis points for the first time in 11 months to 4.75 percent to soak up excess liquidity in the market.

BOK Governor Lee Seong-tae hinted at a further hike of its call rate target, saying the bank will raise the key rate ``if consumer prices and the money supply keeps growing.''

His remarks indicate that the central bank, which declared the end to low-interest rate era last month, has touched off a fresh round of tightening cycle.

Many analysts forecast the central bank will hike the monthly rate one or two more times toward the end of the year in view of robust exports growth and reviving domestic consumption. The bank said future monetary decisions depend on how the macroeconomic situation unfolds.