BOK Governor Plumbs for Gradual Interest Hikes

Bank of Korea Governor Rhee Chang-yong on Monday said a gradual interest increase would be better for Korea than a drastic hike.

"It's more appropriate to raise the base interest rate by 0.25 percentage point at a time to tame rising consumer prices," Rhee told the National Assembly in a hearing. "If there are no changes in external conditions, inflation should remain in the six-percent range for two to three more months before stabilizing gradually."

That would mean October or November.

But Rhee did not rule out a more drastic hike in the worst-case scenario. "If inflation surpasses expectations... we may have to consider a 0.5 percentage point increase."