SEOUL, July 1 – South Korea’s central bank yesterday cut its growth forecast for this year to 4.6 per cent, well below the 6 per cent that President Lee Myung-bak promised to achieve when he took office in February.

The move came as the government reported that prices had risen at their fastest rate in almost a decade last month, fuelled by higher oil and food costs and worsening the Bank of Korea’s quandary over whether to rein in inflation or encourage growth.