The International Monetary Fund is advising South Korea to raise its key interest rate to about four percent.

IMF mission chief to South Korea Subir Lall said Thursday that more decisive monetary tightening is necessary to deal with inflationary pressures and to allow the local currency to gain value. Lall said these measures can be taken as the South Korean economy has recovered from the global economic downturn in 2009.

The financial expert suggested that the optimal interest rate for the nation would be at the neutral level of four percent, which is higher than the current three-and-a-quarter percent.

The neutral interest rate is a theoretical level of interest rate under which a nation can achieve potential economic growth while withstanding the pressure of inflation or deflation.