SEOUL (AFP) - South Koreas central bank on Tuesday raised its key interest rate for the second time in four months in an attempt to tame inflationary pressure in the fast-recovering economy. The Bank of Koreas policy committee voted unanimously to raise the seven-day repo rate by 25 basis points to 2.5 percent, after a similar increase in July raised the rate from a record low of 2.0 percent. The bank said year-on-year inflation is likely to maintain its upward trend above three percent as demand rises, indicating that prices are a greater concern than a stronger won, which makes exports less competitive. The consumer price index rose 4.1 percent in October from a year earlier, a 20-month high, while central bank officials forecast the economy to grow by around six percent for the year. Australia and India raised their interest rates earlier this month to tackle mounting inflation. The Bank of Korea said its policy is to maintain price stability. Its statement dropped a reference to keeping an accommodative stance, suggesting that monetary tightening may continue. However central bank governor Kim Choong-Soo sought at a press conference to ease fears of continuous rate rises. Although we dropped the phrase in the statement, the current monetary policy is still close to an accommodative stance, he said. The market doesnt necessarily interpret that as meaning that were suggesting a back-to-back rate hike. Kim said market fears of a global currency war have eased since the Group of 20 advanced and emerging economies agreed Friday in Seoul to refrain from competitive devaluations. The G20 accord will considerably ease currency uncertainty, he said. The central bank said South Koreas economy, Asias fourth largest, appears set to register solid growth in the coming months, helped by robust exports, increasing consumption and investment. But risks remained. The uncertainties surrounding global exchange rate settings (have) declined, but the possibility of a slowdown in the pace of economic recovery of major countries and the fiscal problems of European countries will act as downside risk factors, it said. The central bank will now probably pause until February or March before another rise, but will be more concerned with inflation than with the strong won, HI Investment and Securities economist Park Sang-Hyun said. The bank likely felt it needed to normalise rates that were still near their crisis-level lows, Park told Dow Jones Newswires. HSBC Research said the rise would likely be the last this year, but further increases totalling at least 75 basis points are expected in 2011. Despite further monetary easing by the Federal Reserve, growing price pressures in Asia necessitate a monetary policy response, it said in a commentary. Unlike previous cycles, therefore, regional central banks will need to lead the Fed this time. Still, there is a long way to go before policy rates hit neutral, HSBC Research added, estimating this figure at 4.3 percent in Korea.