South Korea’s central bank hikes rate for 1st time since 2023 to curb inflation, debt
The move followed rising inflation and a weaker won, while Reuters-poll economists had expected the 25-basis-point increase.
- The BOK raised its benchmark policy rate by 25 basis points to 2.75% on Thursday, marking the first increase since January 2023 and aligning with median economist estimates.
- Headline inflation in June reached 3.2%, exceeding the BOK's 2% target due to energy costs driven by Middle East conflict and weakness of the Korean won, prompting policymakers to act.
- South Korea's economy expanded 1.8% in the first quarter, with the government raising its 2026 growth outlook to 3%, supported by robust semiconductor exports and artificial intelligence spending.
- Stephen Lee at Meritz Securities said, "This move has effectively been well telegraphed," noting analysts expect the BOK to deliver at least one more rate hike before year-end.
- Median forecasts show the BOK will raise the key rate to 3.25% in the first quarter of 2027 and maintain it through the end of next year amid persistent economic pressures.
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26 Articles
Associated Press News
South Korea's central bank hikes rate for 1st time since 2023 to curb inflation, debt
South Korea’s central bank on Thursday raised its key interest rate for the first time in more than three years, aiming to tighten money supply to combat inflation, worsened by the war in the Middle East, and slow the growth of the country’s high household debt.
BOK hikes rates for first time in 3-1/2 years, signals more
South Korea's central bank raised its benchmark interest rate for the first time in three-and-a-half years on Thursday and flagged more to come, as brisk growth in Asia's fourth-largest economy fanned inflation risks.
On the 16th, the Bank of Korea's Monetary Policy Committee raised the base interest rate by 0.25 percentage points from 2.50% to 2.75% to stabilize prices. This marks the first monetary tightening decision in three years and six months since January 2023 (from 3.25% to 3.50%). Prior to this, gold
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