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SEOUL: South Korea’s central bank governor on Friday said policy interest rates will need to be adjusted as an economic recovery takes shape in 2022, suggesting further tightening is in the pipeline as price pressures build.

“The degree of monetary policy easing will be adjusted appropriately in line with the improvement of economic conditions,“ Bank of Korea Governor Lee Ju-yeol said in a speech ahead of the New Year.

“We should look carefully to see if there is a possibility that inflationary pressure would last longer than expected.”

The BOK in November raised interest rates for the second time since the pandemic began to 1.00% and revised up its inflation outlook amid growing concerns about rising household debt and consumer prices.

Data released on Friday showed annual inflation this year soared to a decade-high of 2.5% to outpace the central bank’s forecasts, putting the seven-member board at the BOK under pressure to raise the base rate further in January when it next reviews policy rates.

Analysts surveyed by Reuters see the interest rate reaching 1.25% in the first quarter and 1.50% by the end of 2022. – Reuters

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