Arabic version: بنك كوريا يرفع أسعار الفائدة إلى 3%

According to Cnbc, South Korea’s central bank raised interest rates for a second straight time on Thursday as it seeks to cool rising prices. The Bank of Korea increased its policy rate by 25 basis points to 3%, the highest level since January 2025 and in line with expectations.

The move followed a rise in core inflation, which reached 2.6% in July, its highest level since December 2023. Headline inflation eased slightly to 2.8% in July after increasing for four consecutive months since the Iran war started in February. The central bank said inflation was likely to remain above its target for a “considerable time.”

South Korea’s economy grew 3.7% in the second quarter, exceeding expectations and mainly supported by exports. The Bank of Korea said export and domestic demand are expected to show strong growth, aided by spillover effects from the country’s semiconductor sector. It also pointed to continuing cost pressures and accelerating housing prices in Seoul and surrounding areas.

The central bank said the inflation outlook faced high uncertainty from global oil prices, the exchange rate, the recovery in domestic demand and the broadening increase in wages. Frederic Neumann, chief Asia economist at HSBC, said the Bank of Korea would likely need to keep raising rates with caution, noting that growth was imbalanced and that gains from the AI hardware boom and equity market had not fully translated into broad-based consumption.