South Korea economy to increase rates as inflation accelerates

By @ibtimes on

S. Korean economy announced today that it may raise lending rates to 3.00% during Central Bank's meeting that will be held this week, as the inflations rates exceeded the Bank's target alongside exports surged at the most pace since August 1988.

A report today showed that consumer price index in South Korean has climbed 4.1% during the month of January from a year earlier, which exceeded the Bank's target 4.00%. Further, Korean government intended to cool capital inflows and an increase in food prices this period, higher raw material costs and imported inflation from China are set to stoke price gains, pushing the governor Mr. Kim to join with the counterparts from China to Taiwan and Thailand to discuses this problem that processing to fuel inflationary pressure.

On the other hand, the Bank of Korea has raised the benchmark interest rates raise by 25 basis points to 2.75% during the first month of 2011.

Moreover, Korean exports rose 46% in January from a year earlier, while the nation's currency (Won) has strengthened 11.2% against its major counterpart the greenback since the start of July, the most among Asia's 10 most-traded currencies.

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