The Bank of Korea held its benchmark interest rate at 3% on Thursday, following two consecutive rate hikes, as inflation remained elevated. The decision matched the forecasts of economists surveyed by Reuters.
Inflation keeps policy firm
South Korea’s inflation rate stood at 2.9 percent year on year in September, still above the Bank of Korea’s 2 percent target. Prices have now run above that target for 13 consecutive months.
Analysts said the hold does not signal a change in the direction of monetary policy.
Growth and the tightening cycle
ING said holding rates may not mark the end of the tightening cycle. Inflation is above target while growth remains relatively resilient, the bank said.
South Korea’s GDP grew 3.8 percent in the first quarter and 3.7 percent in the second, according to Trading Economics. The International Monetary Fund projects growth of 3.3 percent for 2026.
Exports and housing policy
Exports rose 83.7 percent year on year in September. Semiconductor exports more than tripled over the same period, growing 262 percent.
The decision came after President Lee Jae Myung was reported to call for all-out efforts to increase housing supply.
Related: Bank Indonesia holds BI Rate at 5.75%, raises deposit rate to 5% · MNB holds base rate at 5.5% as inflation sits at 1.6%
Source: Bank of Korea | Data: FRED — St. Louis Fed
