Global investment banks up inflation forecasts for S. Korea

SEOUL (Yonhap) - Global investment banks have raised their inflation forecasts for South Korea amid growing concerns over accelerating rises in consumer prices in Asia's fourth-largest economy, a report showed Tuesday.
According to the report by the Korea Center for International Finance, the average annual inflation forecast for South Korea predicted by the main nine investment banks, including Goldman Sachs, reached 4 percent last month, unchanged from the previous month's forecast.
BOA Merill Lynch expects South Korea's annual inflation rate to reach 4.4 percent for the year, with Goldman Sachs and Deutsche Bank each predicting 4.2 percent and 4.1 percent.
BNP Paribas and JP Morgan predicted the country's inflation will stand at 4 percent for the year, according to the report.
But Deutsche Bank and UBS raised their inflation estimates by 0.1 percentage point and 0.2 percentage points, respectively, from the previous month's forecasts, the report showed.
South Korea's inflation accelerated to a four-month high in July, putting pressure on the country's central bank to raise its key rate to tame rising inflationary pressure.
Consumer prices rose 4.7 percent from a year earlier, quickening from the previous month's 4.4 percent gain, according to government data.
The figure represents the seventh straight month that consumer prices have grown over the government's renewed annual inflation target of 4 percent for the year.
The Bank of Korea is scheduled to hold its monthly rate-setting meeting next week, and market experts expect the central bank to raise the policy rate, currently at 3.25 percent, amid growing inflationary pressure.
On July 14, the central bank kept its key interest rate unchanged following a hike the previous month.