Overview
- The Bank of Korea raised the base rate by 25 basis points to 3.00% on Thursday, Aug. 27, marking a second consecutive monthly increase after July's hike.
- Officials raised the central forecast for 2026 growth to 3.3% on strong semiconductor exports and AI-related investment while keeping the 2026 inflation forecast at 2.7%.
- Recent data showed core inflation at 2.6% year‑on‑year in July and headline CPI at 2.8%, which the BOK said justifies preemptive tightening to prevent wider price pressures.
- The Monetary Policy Board approved the move by a 6-1 vote, with one member preferring to hold rates, and the bank highlighted fast-rising housing prices in Seoul and growing household loans as financial stability risks.
- Markets largely expected the hike so immediate market moves were muted, and investors are now focused on Governor Shin Hyun-song’s press conference and the updated dot-plot for clues on the terminal rate and timing of any further increases.