The Bank of Korea unexpectedly raised its benchmark interest rate to a five-year high of 4.5 per cent on Thursday, in a step that aims to curb rising inflationary pressure despite growing concerns over a slowdown in the economy.

Thursday’s rise of a quarter percentage point was the fifth rise since last October, which government officials said showed the central bank’s confidence in economic growth which has faltered as higher oil prices and the stronger won take their toll.