Majority of board members project rates at 3.00% within six months as inflation forecast jumps to 2.7% for 2026.
The Bank of Korea left its benchmark rate unchanged at 2.50% but indicated a strong bias toward tightening, with two board members dissenting in favor of an immediate hike. The central bank’s dot plot revealed 10 of 21 projections at 3.00% within six months, signaling growing consensus for higher rates.
Economists had widely expected the hold, though the hawkish tone surprised markets. The BOK raised its 2026 inflation forecast to 2.7% from 2.2% and lifted GDP growth projections to 2.6%, citing persistent price pressures and a chip-driven economic recovery.
Key risks under watch include exchange rate volatility, housing market conditions, and household debt. The board emphasized it will calibrate rate moves based on inflation trends, economic recovery, and financial stability.