C.banks should use rates to check prices-BOK official

SEOUL, Aug 13 (Reuters) - Central banks need to use interest rates to tackle inflation stemming from higher import prices of raw materials, a South Korean central bank economist said on Wednesday.

Kim Geun-young, an economist at the Bank of Korea's Institute for Monetary & Economic Research, said in a research paper that stable prices usually help gradual recoveries in production and consumption.

"Central banks need to use interest rates to cope with higher inflation on rising imported raw material prices. The real economy will recover gradually if an interest rate hike stabilises prices," Kim told Reuters by telephone.

The paper came almost a week after the Bank of Korea raised interest rates to a 7-½ year high of 5.25 percent to check inflation in Asia's fourth-largest economy.

South Korea's consumer prices in July rose 5.9 percent from a year ago, marking the fastest annual gain in nearly 10 years and remaining above the central bank's target range of 2.5-3.5 percent.

June's import prices in won terms jumped by their fastest pace in over a decade, rising 49 percent from a year earlier due to higher oil and raw material prices.

But many economists expect the Bank of Korea to leave interest rates unchanged for the rest of the year on a slowing economy.

Kim also said the central bank needed to consider economic growth when it sets interest rates.

"Higher global uncertainties may hit our exports and cut overall growth. (The Bank of Korea) needs to consider that," he said.

The Bank of Korea said Kim's research paper did not represent the central bank's official opinion. (Reporting by Cheon Jong-woo; Editing by Jonathan Hopfner)