S.Korea base rate hiked 25 bps to 2.50 Reuters poll 2.50
BOK upgrades 2022 inflation outlook to 5.2
Most analysts see base rate reaching 2.75 by yearend

SEOUL, Aug 25 Reuters South Korea39;s central bank raised its key interest rate by a quarterpercentage point on Thursday and significantly lifted inflation forecasts, signalling more policy tightening, which sent bond yields and the local currency higher.

Governor Rhee Changyong said fighting inflation remained the Bank of Korea39;s priority, noting market expectations about the rate reaching 2.75 or 3.00 by the yearend still looks appropriate but warned this would need to be reviewed if growth sharply weakened.

As long as our growth rate stays relatively sound compared with other countries, making sure inflation is under control first would be helpful for everyone in the medium to longterm, Rhee said in a news conference in Seoul.

That commitment to further tightening sent the won higher and policysensitive futures on threeyear treasury bonds down.

The BOK raised its benchmark policy rate by a quarter of a percentage point to 2.50, resuming normalsized 25 basis point increments after delivering an unprecedented 50basis point hike in July to curb inflation, which is at a near 24year high.

All but one of 36 analysts in a Reuters poll expected the bank to go for the quarterpoint hike, while one expected a halfpoint hike.

The BOK raised this year39;s inflation forecast to 5.2 from 4.5, which would be the fastest…