The Bank of Korea held its benchmark rate at 3% on Thursday in a unanimous decision, following rate increases in July and August, and the governor said it needs more time to assess their effects. Uncertainties include the Middle East conflict, monetary and fiscal policies in major economies, and possible U.S. policy changes after the midterm elections. The bank expects growth this year and next to exceed its August forecasts of 3.3% and 2.9%, supported by strong semiconductor demand, while headline and core inflation are expected to stay close to its August forecasts of 2.7% and 2.5% this year. The won's recent rise against the dollar has eased pressure for an immediate hike, but domestic consumption and construction remain weak. The governor said inflation must return firmly to the 2% target, and the timing and direction of the next decision remain open.
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Original headline: Bank of Korea holds rate at 3 % while assessing earlier increases
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The Bank of Korea (BOK) kept its benchmark rate unchanged at 3%, after two consecutive hikes in July and August to curb inflation. The Monetary Policy Board said it needed to assess the effects of those hikes and risks at home and abroad, including Middle East tensions and monetary and fiscal policies in major economies. CPI inflation was 2.9% in September and is expected to stay at a similar level in October due to higher oil prices. Second-quarter GDP grew 0.6%, the BOK raised its 2026 growth forecast to 3.3%, and the current account surplus reached US$279.2 billion in the first eight months of the year. Governor Shin Hyun-song said tightening will continue until inflation is firmly on track toward the 2% target, and markets expect another hike at the next policy meeting.
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