South Korea's central bank raises key interest rate

SEOUL (AP) - South Korea's central bank said Thursday it raised its key interest rate by 0.25 percentage point to cope with spiraling inflation. 

The Bank of Korea decided to increase its benchmark seven-day repurchase rate to 5.25 percent from 5.0 percent, said central bank spokesman Kim Sung. 

It was the first time the country's central bank raised the rate since August 2007, he said. 

The measure was taken "because prices of commodities have kept rising and don't have any signs of declining anytime soon,'' Kim said. 

The bank has no immediate plans to raise its key rate again, he added. 

Last month, the central bank slightly lowered its growth forecast for the country's economy to 4.6 percent, saying sluggish domestic demand is unlikely to pick up. 

The Bank of Korea also predicted consumer inflation for this year would reach 4.8 percent, greater than the bank's inflation target of 3.5 percent. 

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