Interest rates going up with inflation, record household debt

Bank of Korea Gov. Lee Ju-yeol decides to raise Korea's benchmark interest rate by 25 basis points to 0.75 percent during a monetary policy board meeting held in August. [BANK OF KOREA]

The Bank of Korea raised the country's base interest rate by 25 basis points to 1 percent on Thursday.

It was the second rate hike this year following an increase in August of 25 basis points to 75 percent.

Thursday's rate hike was expected as consumer prices rise sharply along with household debt.

In the third quarter, household debt hit a record 1,844.9 trillion won ($1.55 trillion), 9.7 percent higher than a year before, according to the central bank data Wednesday.

After an October rate-setting meeting, Bank of Korea Governor Lee Ju-yeol said there was a consensus among members of the monetary policy board that a rate hike should be considered in the November meeting.

Thursday's meeting was the last rate setting meeting of the year.

BY KIM JEE-HEE [kim.jeehee@joonang.co.kr]