Bank of Korea holds rate at 3%; November hike forecast

The Bank of Korea held its benchmark interest rate at 3.00% on Thursday, October 22, pausing after quarter-percentage-point increases in July and August. Economic Times Markets, citing Reuters, reported that the seven-member monetary policy board’s decision matched the expectations of all 34 economists polled.

The unchanged seven-day repurchase rate follows the central bank’s first back-to-back increases in more than three years. The pause comes as inflation remains above target and strong semiconductor demand supports South Korea’s export economy.

Inflation eases, but policy remains restrictive

Headline consumer inflation slowed to 2.9% in September from 3.1% in August, still exceeding the central bank’s 2% target.

Governor Shin Hyun Song had signalled a preference for gradual tightening after the earlier increases. At an International Monetary Fund event on October 13, he reiterated that monetary policy would remain restrictive until inflation moved towards the target, according to the report.

Export strength keeps another increase in focus

Global investment in artificial intelligence has supported demand for South Korean semiconductors. The report said exports exceeded $800 billion during January–September for the first time, highlighting the strength of overseas demand.

The median forecast in the Reuters survey put the benchmark rate at 3.25% at the November meeting, consistent with the central bank’s projected rate path as described in the report. That is a forecast, not an announced decision: October’s hold does not establish that the tightening cycle has ended.