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South Korea eyes further rate increases after 2nd straight hike

Government announces a $12bn supplementary budget to help small businesses

 The Bank of Korea building in Seoul. (Photo by Takaki Kashiwabara) 

SEOUL -- The Bank of Korea on Friday raised its key interest rate to 1.25% from 1%, a second-straight hike aimed at easing inflation pressure in Asia's fourth-largest economy.

The increase -- expected by 25 out of 35 economists in a Reuters poll -- follows a 25 basis point rise in November. Inflation in South Korea hit a 10-year high last year, with its consumer price index rising 2.5%.

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