His remarks, made during a weekly cabinet meeting one day before January inflation figures are released, lifted the won and dampened bond futures prices by giving a rare boost to the case for a further interest rate increase. "(The government) should contain inflation even if economic growth slows," a presidential office statement quoted Lee as saying, raising his rhetoric on inflation by indicating for the first time he could sacrifice economic growth somewhat. His remarks came hours after data showed industrial output in December fell for a third consecutive month and by much more than the worst market forecasts, although an official leading indicator indicated the economy may be at or near its bottom. "We think the next base rate move will be a hike in the second half, as a cut would not be right at this point," said Hwang Na-young, economist at Taurus Investment & Securities, adding the Bank of Korea was only waiting for global uncertainties to ease before resuming its policy-tightening drive. The central bank last changed its policy interest rate in June, when it was increased 25 basis points to 3.25 percent. Lee's remarks came a day before the government releases inflation data for January, which many analysts expect to show annual growth easing from December but fall short of providing a clear sign that inflation is headed for a sharp slowing. In December, annual inflation was 4.2 percent. The median forecast for January in a Reuters poll of economists is for 3.6 percent. Also due out on Wednesday is preliminary trade data for January. SOME SEE RATE CUT, NOT RISE In the latest Reuters survey on interest rate policy, a small majority of analysts forecast the Bank of Korea would cut the policy rate during the first half, although a minority still saw room for a raise. After Lee's remarks, the won reversed early losses to gain 0.3 percent against the dollar at 1,124.4 while March futures on 3-year treasury bonds dipped 0.09 points to 104.45. Stock prices were little affected and rose 0.5 percent. The industrial output index -- which measures added value in the mining, manufacturing, electricity and gas industries -- fell by a seasonally adjusted 0.9 percent in December from November, Statistics Korea data showed early on Tuesday. Compared with a year earlier, the index rose 2.8 percent. The median forecast from a Reuters survey of analysts was for the index to rise a seasonally adjusted 0.7 percent in December from the previous month and 4.0 percent from a year earlier. The worst forecast in the survey was for a 0.5 percent monthly fall. Economists said the figures indicated Asia's fourth-largest economy, buffeted by the euro zone debt crisis and sluggish growth in advanced economies, was passing through a deeper seasonal trough than previously expected. It was the longest losing streak for industrial output on a month-on-month basis since December 2008 when the global economy was near the bottom of the worst downturn in decades. The composite leading indicator, a barometer of where South Korea's economy is headed, rose 1.5 percent in December from a year earlier after a 1.1 percent annual gain in November. INVENTORY RATIO BODES ILL The ratio of inventories to shipments of finished goods rose for a third consecutive month to 117.1 percent, the highest since January 2009, boding ill for the overall manufacturing sector in coming months. On Tuesday, Lee also said that recent moves by major political parties to toughen regulations on the country's big, mostly family-run business conglomerates would harm investment and employment in the country. "Recently the political environment is unfolding toward shrinking business activity, but this is of no help to the people," Lee said. Lee, who rose to power months before the outset of the 2008 global financial crisis, won plaudits for achieving a pullout from the slump earlier and faster than most had expected, but his popularity at home has fallen. He begins his fifth and final year in office in February as his conservative party is faced with an uphill battle against the opposition in the April parliamentary elections and December presidential poll. He is banned from running for a second term.