On July 16, 2026, the Monetary Policy Board of the Bank of Korea raised the Base Rate by 25 basis points to 2.75%, judging that stronger export- and investment-led growth, inflation expected to remain above target for a considerable time, and persistent financial stability risks warranted tighter policy, with the move following a May hold at 2.50% after 25 basis point cuts in February and May 2025. The Board also raised the rate on programs under the Bank Intermediated Lending Support Facility by 25 basis points to maintain consistency with the monetary policy stance. The Bank of Korea said the domestic economy had strengthened further, led by semiconductors, with this year’s growth expected to considerably exceed the May forecast, while June consumer price inflation rose to 3.2% and household loans increased substantially as housing price gains in Seoul and surrounding areas accelerated. In markets, volatility in major price variables increased significantly, with the Korean won to USD exchange rate rising on foreign stock outflows and USD strength before easing as foreign exchange supply-demand conditions improved. Globally, the Bank of Korea expects moderate growth supported by robust AI investment, but said Middle East developments and lagged pass-through from higher energy prices would keep inflation elevated for some time. All seven members supported the decision unanimously, and the Board said it would maintain a stance consistent with further rate hikes, with the timi
Bank of Korea2026-07-16
Bank of Korea Raises Base Rate by 25 Basis Points to 2.75%
The Bank of Korea on July 16, 2026 raised the Base Rate by 25 basis points to 2.75% and increased rates on programs under the Bank Intermediated Lending Support Facility by 25 basis points, citing stronger export- and investment-led growth, inflation expected to remain above target for a considerable time, and persistent financial stability risks. The unanimous Board said growth is likely to considerably exceed its May forecast, with June consumer price inflation at 3.2% and household loans rising substantially, and signalled a stance consistent with further rate hikes depending on inflationary pressure, domestic growth and financial stability.