South Korea Interest Rate

The Bank of Korea maintained its base rate at 2.50% in October for the third consecutive meeting but implied that more easing is on the way. The decision came amid concerns over a broader economic outlook including a persistent property market slump, sluggish export demand, and the implementation of stricter fiscal policies. At the same time, inflationary pressures have eased, with headline inflation slowing to 2.1% year-over-year in September, nearly aligning with the central bank’s 2% target. The BoK its GDP growth forecast at 0.9% for 2025 and 1.6% for 2026, mainly driven by domestic consumption. Meanwhile, although exports are expected to remain resilient for some time, supported by strength in the semiconductor sector, the impact of US tariffs on Korean exports is likely to expand gradually. The BOK also kept its projections for headline inflation at 2.0% for this year and 1.9% for 2026, while core inflation is expected to remain at 1.9% for both years.