Bank Of Korea Stands Pat On Rates As Expected
(RTTNews) - The Bank of Korea retained its key interest rate again on Thursday and signaled a prolonged pause to the policy easing as weaker won poses an upside risk to inflation.
The Monetary Policy Board decided to maintain the Base Rate at 2.50 percent. The decision came in line with forecast.
The central bank had previously lowered the benchmark rate by a quarter-point each in May and February 2025.
The bank forecast inflation to gradually fall to the 2 percent level supported by stable global oil prices. For this year, both headline and core inflation are projected to be generally consistent with the November forecast of 2.1 percent and 2.0 percent, respectively.
Although inflation is expected to gradually decline, the elevated exchange rate remains a source of upside risk, the bank noted.
Economic growth is expected to be broadly consistent with the November forecast of 1.8 percent for this year.
However, upside risks are judged to have increased somewhat, reflecting the accelerating upward trend in the semiconductor sector and the stronger than expected growth in major economies.
"Regarding financial stability, risks still remain related to housing prices in Seoul and its surrounding areas, to household debt, and to the heightened exchange rate volatility," the bank said.
"Better growth conditions and increasing FX concerns appear to have led to a much sooner-than-expected shift to a neutral policy stance," said ING economist Min Joo Kang. The economist expects the bank to remain on hold throughout 2026.
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