Key facts
- The Bank of Korea held its benchmark interest rate at 3.00% on Thursday.
- This pause follows two consecutive rate hikes in July and August.
- Inflation has hovered around 3% in recent months, with prices rising 2.9% in September.
- The BOK raised its 2026 growth forecast to 3.3% from 2.6%.
The Bank of Korea kept its benchmark interest rate unchanged on Thursday, pausing its tightening cycle after two consecutive hikes. The Monetary Policy Board's decision to hold the rate at 3.00% was widely anticipated. The central bank had previously raised rates in July and August to curb mounting inflationary pressures and ensure macroeconomic stability. Concerns that higher borrowing costs could strain lower-income households influenced the decision to pause. Despite the pause, the BOK signaled a hawkish stance due to persistent inflation, driven by rising oil prices and renewed Middle East tensions, as well as a stronger-than-expected economic recovery. Consumer prices have been around 3% recently, with inflation expected to remain at a similar level in October. Governor Shin Hyun-song has indicated that monetary policy will remain tight until inflation is firmly on track to reach the 2% target. The economy has shown solid growth, expanding 1.8% in the first quarter and 0.6% in the second quarter, with the BOK raising its 2026 growth forecast to 3.3%.