The Bank of Korea’s Monetary Policy Board raised the Base Rate by 25 basis points to 3.00%, citing stronger-than-expected economic growth, inflation likely to remain above target for a considerable period and financial stability risks. Six members supported the increase, while one voted to hold the rate at 2.75%. Conditional six-month projections indicate scope for further tightening, with 16 of 21 member dots above the new rate. The Bank raised its growth forecasts to 3.3% for 2026 and 2.9% for 2027, from 2.6% and 2.1%, respectively, supported by semiconductor-led exports, investment and recovering consumption. Headline inflation is forecast at 2.7% in 2026 and 2.3% in 2027, unchanged from May, while core inflation forecasts were increased to 2.5% for both years. The Board also highlighted rapid housing price gains in Seoul and surrounding areas and substantial household loan growth. The Board will determine the timing and pace of further rate increases by assessing inflation, domestic growth and financial stability. In the six-month conditional projection, 10 dots were placed at 3.25%, six at 3.50% and five at 3.00%.
2026-08-27Bank of Korea
Bank of Korea raises Base Rate by 25 basis points to 3.00%, signals scope for further increases
The Bank of Korea raised the Base Rate by 25 basis points to 3.00% as growth exceeded expectations and inflation remained above target. It sharply increased its 2026 and 2027 growth forecasts and flagged housing and household debt risks. Six-month projections show most member dots above the new policy rate.