South Korea's central bank raised its benchmark interest rate on Wednesday by a half percentage point to 3 percent, in another big-step rate hike aimed at taming continued inflation driven by higher food prices.
The Bank of Korea's monetary policy board decided to lift the interest rate from 2.5 percent, marking the first time since October 2012 it reached that level. It is also the first time for the bank to increase its rate five times in a row.
The BOK in July raised its key rate by an unprecedented half percentage point amid deepening worries over inflation.
The bank said in a statement that the board saw the need for another rate increase "as additional inflationary pressures and the risks to the foreign exchange sector have increased, affected by the rising Korean won to U.S. dollar exchange rate, while inflation has remained high."
The BOK said it expects the nation's consumer price inflation to remain high in the 5 percent to 6 percent range for the time being, as the impact of a weakening Korean won against the dollar provides additional inflationary pressure.
The bank also predicted that domestic economic growth will gradually slow, driven by the sluggish global economy and increased interest rates set by other central banks.
