Seoul:The Bank of Korea (BOK) maintained its benchmark interest rate at 3 percent on Thursday following two consecutive rate hikes aimed at curbing accelerating inflation. The decision was made amid ongoing tensions in the Middle East and robust export performance.
According to Yonhap News Agency, the BOK's Monetary Policy Board chose to keep the rate unchanged during its latest rate-setting meeting, a move widely anticipated by market analysts. The rate was previously increased in July and August as part of "preemptive action" to address inflationary pressures and ensure macroeconomic stability.
The recent rate hikes marked the first consecutive increases since January 2023, following a series of seven rate hikes that began in April 2022. The central bank has paused its tightening measures due to concerns about the potential financial strain on lower-income households caused by higher borrowing costs.
Despite the pause, the BOK has indicated it will continue a hawkish monetary policy stance due to ongoing inflationary pressures from rising oil prices and uncertainty in the Middle East. Consumer prices have remained around 3 percent, with slight fluctuations over recent months, and similar levels are expected to persist into October.
BOK Governor Shin Hyun-song stated that the central bank will persist in its monetary policy tightening until inflation aligns with the 2 percent target. The country's economic growth, driven by strong semiconductor exports and demand for AI infrastructure, has supported the BOK's approach, with an upward revision of the 2026 growth forecast to 3.3 percent.
Market experts anticipate another rate hike at the BOK's upcoming policy meeting on November 26.