South Korea Interest Rate

The Bank of Korea (BoK) maintained its base rate at 2.50% in November for the fourth consecutive meeting, the final policy session of the year, as expected. The decision came amid concerns about the broader economic outlook, including an overheated housing market and a volatile currency exchange rate. Since October last year, the BoK has cut rates by a cumulative 100 bps to support economic growth. Meanwhile, price pressures slightly accelerated, with headline inflation rising to 2.4% year-on-year in October, the highest level since July 2024 and above the central bank’s 2% target. Q3 GDP grew 1.2% quarter-on-quarter, marking the strongest expansion in over a year. The central bank revised its GDP growth forecast for 2025 to 1.0%, up from 0.9%, while the 2026 forecast was revised to 1.8% from 1.6%. The headline inflation forecast for 2025 was raised to 2.1%, and the same forecast applies for 2026. Core inflation forecasts remained at 1.9% for 2025 and were revised to 2.0% for 2026.