SEOUL—South Korea’s central bank raised its policy interest rate by an unprecedented half point on Wednesday, aiming to pull inflation from 24-year highs while balancing fear of a sharp economic downturn as business activity flounders.
Though 6 percent inflation prompted calls for action, a policy rate widely seen peaking by year-end at 2.75 percent—five times higher than at the onset of the COVID-19 pandemic over two years ago—would pile pressure on the world’s most indebted consumers who are also contending with mortgage rates at nine-year highs.
