Bank of Korea pauses rate hikes amid strong growth and sticky inflation
The Bank of Korea kept its benchmark rate at 3% on Oct 22, pausing after two consecutive 0.25-point increases in July and August.
On Oct 22, the Bank of Korea left its key interest rate unchanged at 3%, halting a streak of back-to-back quarter-point hikes in July and August, the first consecutive increases in over three years. All 34 analysts surveyed by one outlet had predicted the hold. Governor Shin Hyun Song reiterated that policy will stay tight until inflation aligns with the 2% target, emphasizing a gradual tightening approach.
September consumer price growth slipped to 2.9% from 3.1% in August, still above the bank’s goal, while exports surged thanks to worldwide AI spending, pushing shipments to exceed US$800 billion for the first time. Market analysts expect a possible rise to 3.25% at the November meeting, reflecting the BOK’s own dot-plot forecast. Shin is set to address the media at a news conference later in the day.
Why it matters
The rate decision signals how South Korea will balance growth and inflation, affecting markets and borrowers.
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