South Korea Interest Rate

The Bank of Korea (BoK) left its base rate unchanged at 3.00% at its October 2026 meeting, in line with expectations, pausing after rare back-to-back 25-basis-point hikes in July and August to address inflation risks. The decision gives policymakers more time to assess how households and businesses are responding to higher borrowing costs, amid persistent price pressures and strong export-driven growth. Annual consumer inflation eased to 2.9% in September from 3.1% in August but remained above the BoK’s 2% target, while one-year-ahead inflation expectations held at 2.7%. Producer price inflation also reached 7.7% in September, raising concerns about further pass-through to consumer prices. Meanwhile, strong semiconductor exports driven by global AI demand supported growth, prompting the BoK to raise its 2026 growth forecast to 3.3% from 2.6% in August. The BoK’s August projections pointed to one further rate hike before year-end.

The Bank of Korea (BoK) raised its base rate by 25 basis points to 3% at its August 2026 meeting, in line with market expectations, marking a second consecutive rate hike and the first back-to-back increases since early 2023. The decision reflected persistent inflation risks as stronger-than-expected economic growth and an unprecedented semiconductor boom fueled by global AI demand boosted the export-driven economy. Q2 gross domestic income surged 15.6% year-on-year, its strongest growth in more than 38 years, underscoring the economy’s robust momentum. In turn, the BoK raised its 2026 growth forecast to 3.3% from 2.6% previously and projected 2.9% growth in 2027. Meanwhile, inflation remained above the central bank’s 2% target, with consumer prices rising 2.8% in July and core inflation at 2.6%. The won’s recent strengthening also reduced pressure to delay tightening, while policymakers sought to contain persistent price pressures amid robust economic momentum.

The Bank of Korea (BoK) raised its base rate by 25 basis points to 2.75% at its July 2026 meeting, in line with market expectations, and marking the first rate hike since January 2023. The decision reflected mounting inflationary pressures, with annual consumer inflation accelerating to 3.2% in June from 3.1% in May, remaining well above the central bank’s 2% target amid elevated oil prices and a weaker won. Policymakers also cited robust household credit growth, rising property prices, and persistent exchange rate pressures as factors warranting tighter monetary policy. At the same time, the BoK said concerns over economic weakness had eased amid a semiconductor export boom driven by AI demand and projected the economy to grow 2.6% in 2026. Governor Shin Hyun-song emphasized that restoring price stability had become the central bank’s priority despite the higher borrowing costs for households and businesses.