Bank of Korea pauses at 3% after two straight hikes
South Korea's central bank left its benchmark rate at 3.00% on Thursday, taking a breather after back-to-back increases in July and August. The call matched the view of all 34 economists polled by Reuters.
The Bank of Korea’s seven-member policy board kept the seven-day repurchase rate unchanged, marking a halt after the first consecutive rate increases in more than three years. Governor Shin Hyun-song had already signalled a preference for a more measured tightening pace following those two moves.
Speaking at an International Monetary Fund event on October 13, Shin said policy would stay restrictive until inflation moves closer to the bank’s target.
Price pressures in South Korea have cooled somewhat but remain above goal. Annual consumer inflation eased to 2.9% in September from 3.1% in August, still well above the BOK’s 2% target.
At the same time, exports have stayed strong on the back of global demand for semiconductors tied to artificial intelligence spending. South Korean shipments topped $800 billion between January and September, a first for that nine-month period.
With growth holding up and inflation still elevated, markets continue to price in further tightening despite October’s pause. The median estimate in the Reuters survey points to a rate increase to 3.25% at the BOK’s November meeting, consistent with the bank’s broader policy path. The pause gives officials time to gauge the impact of the July and August hikes while watching inflation, export trends and financial conditions.
Why it matters: A steady rate alongside signals of a possible November hike can support the South Korean won and local bond yields, while sustained strength in semiconductor exports feeds into broader sentiment on Asian equities and the AI-driven trade cycle that also affects Nasdaq-listed tech names.
Source: Economic Times Markets