S Korea raises key interest rate to highest since 2001

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SEOUL, Aug 7 (AFP): South Korea's central bank today raised its key interest rate to the highest level since 2001 in an attempt to curb inflation despite the slowing economy.

The Bank of Korea increased the benchmark seven-day repurchase agreement rate for August to 5.25 per cent from five per cent. The increase, the first for a year, brings the rate to its highest since early February 2001.

"Consumer prices are expected to remain stubbornly high for a considerable time given lingering fallout from higher oil prices and a possible gain in public utility charges," it said in a statement.

Annual inflation hit a near 10-year high of 5.9 per cent in July. The central bank expects full-year inflation of 4.8 per cent.