The Bank of Korea(BOK) has raised its benchmark interest rate by 25 basis points to three-point-five percent in a bid to tame soaring prices.

In the central bank’s first rate-setting monetary policy meeting of the year on Friday, the key rate was raised by a quarter of a percentage point to mark the seventh consecutive hike for the first time ever.

The rate hike is aimed at curbing persistently high inflation, which rose five percent on-year in December to remain above five percent for the eighth consecutive month since May of last year.

The hike also comes amid growing gaps with the U.S. key rate, which stands in the range of four-point-25 percent to four-point-five percent, as the BOK strives to arrest the depreciation of the local currency against the greenback.

The gap between the interest rates of the two nations, which widened to one-point-25 percentage points after the Fed's rate hike in December, has now narrowed to one percentage point.