The Bank of Korea (BOK) maintained its policy rate at 3% on Thursday, following a series of rate hikes that were expected. The central bank's decision does not indicate a shift in its policy stance, as inflation remains elevated at 2.9% in South Korea, which has been above the target of 2% for 13 months. Analysts from Dutch Bank ING noted that the pause in rate hikes is unlikely to signal the end of the tightening cycle as inflation remains above target and economic growth is resilient.
Key points
The Bank of Korea (BOK) maintained its policy rate at 3% on Thursday, following a series…: The Bank of Korea (BOK) maintained its policy rate at 3% on Thursday, following a series of rate hikes that were expected.
The central bank's decision does not indicate a shift in its policy stance, as inflation…: The central bank's decision does not indicate a shift in its policy stance, as inflation remains elevated at 2.9% in South Korea, which has been above the target of 2% for 13 months.
Analysts from Dutch Bank ING noted that the pause in rate hikes is unlikely to signal the…: Analysts from Dutch Bank ING noted that the pause in rate hikes is unlikely to signal the end of the tightening cycle as inflation remains above target and economic growth is resilient.
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South Korea's central bank expectedly kept its policy rate steady at 3% on Thursday, after two straight hikes, with analysts pointing that it does not signal a change in policy stance as inflation stays elevated.
Economists polled by Reuters had forecast the Bank of Korea to hold rates and the decision comes after President Lee Jae Myung reportedly called for an "all out effort" to boost housing supply.
Inflation in Asia's fourth-largest economy came in at 2.9% in September, staying at or above the BOK's 2% target for 13 months.
Analysts from Dutch Bank ING said that the pause was unlikely to mark the end of the tightening cycle, as inflation remains above target and economic growth was relatively resilient.
Growth for South Korea has been largely supported by exports of semiconductors as demand for chips to power the AI boom continues.
Exports for September skyrocketed at a record 83.7% year on year, with semiconductors spiking over 262% compared to the same period last year.
The IMF has projected the country's growth at 3.3% for the whole of 2026. GDP growth for the country came in at 3.8% and 3.7% for the first and second quarters respectively, both times beating expectations.
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The Bank of Korea left its benchmark interest rate unchanged at 3.00% after back-to-back hikes in July and August, following strong chip-driven growth and above-target inflation. The central bank's decision to pause its tightening cycle is based on the expectation that further interest rate hikes will be necessary until inflation converges to its target. Analysts had forecast no change to rates, but the recent rise in market volatility, particularly in the stock market, has made it difficult for a hawkish call to…
The Bank of Korea (BOK) maintained its benchmark interest rate at 3 percent on Thursday, following back-to-back quarter-point hikes in July and August. The central bank's seven-member monetary policy board voted to keep the seven-day repurchase rate unchanged, despite strong chip-driven growth and above-target inflation. Although the recent increase in market volatility, particularly around the stock market, makes it challenging for a hawkish call to emerge, the BOK will likely raise its base rate to 3.25 percent…