SEOUL, Feb. 9 (UPI) -- South Korea's central bank Thursday raised its key interest rate by a quarter point for February to tackle inflationary pressures.
The Bank of Korea said it has boosted its overnight call rate target by a quarter percentage point to 4 percent from 3.75 percent, the second hike in three months. The rate is the highest since May 2003.
The bank said the rate hike is aimed at coping with inflationary pressures amid signs of an economic recovery backed by a rapid increase in private consumption.
"There are latent inflationary pressures due to the economic recovery and persistently high oil prices," the BOK said in a statement.
BOK Governor Park Seung said that the country's economy is on a recovery track. "The economic recovery is stronger than we had expected thanks to domestic demand and capital spending," he told reporters.
Earlier that day, the National Statistical Office said South Korea's consumer confidence improved for a fifth consecutive month in January.
But concerns are spreading that the higher rate would further boost the won's rise the U.S. dollar, which could hurt exporters' profit. The South Korean currency has already risen 4 percent this year.
