The Bank of Korea’s Monetary Policy Board unanimously held the Base Rate at 3.00% for the intermeeting period, judging it necessary to assess domestic and external risks and the effects of earlier tightening despite strong growth and persistent inflation pressures. The rate had risen from 2.50% through 25-basis-point increases in July and August. Consumer price inflation reached 2.9% in September and is expected to remain above target for a considerable time as cost pressures persist and demand-side pressures strengthen. Growth in 2026 and 2027 is expected to considerably exceed the August forecasts of 3.3% and 2.9%, respectively, supported by strong semiconductor exports and investment and an accelerating consumption recovery. Household loans declined, although housing-related lending continued to increase. The Korean won strengthened significantly against the US dollar as a large current account surplus supported improved foreign exchange supply-demand conditions. Globally, robust artificial intelligence investment is expected to sustain favorable growth, while higher energy prices and supply constraints keep inflation elevated amid intensified Middle East tensions. The Board maintained its signal of further Base Rate increases, with their timing and pace to depend on inflation, domestic economic developments and financial stability.
Bank of Korea Holds Base Rate at 3.00%
The Bank of Korea’s Monetary Policy Board unanimously held the Base Rate at 3.00% to assess domestic and external risks and the effects of earlier tightening. It maintained its signal of further increases amid strong growth and persistent inflation pressures, with timing and pace dependent on inflation, domestic economic developments and financial stability.