In a surprise move, the Bank of Korea raised its main interest rate on Friday from 3% to 3.25%.
Many analysts had expected rates to stay on hold again.
The BBC reports that inflation actually fell to 4.1% in May, after peaking at 4.7% in March. The bank targets a range of 2% - 4%.
The Korean economy has been showing signs of slowing and markets were expecting the bank to prioritise growth over tackling price rises.
The bank previously raised rates by a quarter of a percentage point in January and again in March.