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World|economy|July 13, 2022 / 02:48 PM
South Korea raises base rate by 50 bps to 2.25% for the first time ever

AKIPRESS.COM - South Korea's central bank raised its policy interest rate by an unprecedented half point on Wednesday, aiming to pull inflation from 24-year highs while balancing fear of a sharp economic downturn as business activity flounders, Reuters reports.

Though 6% inflation prompted calls for action, a policy rate widely seen peaking by year-end at 2.75% - five times higher than at the onset of the COVID-19 pandemic over two years ago - would pile pressure on the world's most indebted consumers who are also contending with mortgage rates at nine-year highs. 

The Bank of Korea (BOK) raised its benchmark interest rate by 50 basis points to 2.25%, the biggest increase since the bank adopted the current policy system in 1999, and coming even as it expects gross domestic product growth "below the May forecast of 2.7%".

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