South Korea’s central bank, the Bank of Korea (BOK), kept its benchmark rate at 3% Thursday, balancing a stronger export outlook led by chips against September inflation above its 2% target.
All seven members of the Monetary Policy Board voted to leave the rate unchanged. The BOK had lifted it by 25 basis points in July and again in August, moving from 2.50% to 3.00%. The bank said it wanted to assess the effects of those increases as uncertainty continued around the Middle East conflict and monetary and fiscal policies in major economies. Bank of Korea Governor Shin Hyun-song said officials would “determine the timing and pace of further Base Rate hikes while closely monitoring incoming data.”
September trade figures showed strong export growth. South Korea exported $120.94 billion, up 83.5% from a year earlier, while semiconductor exports climbed to $60.30 billion, a 262.8% increase, the Ministry of Trade, Industry and Resources said. The BOK said it now expects growth in both 2026 and 2027 to be considerably higher than its August forecasts of 3.3% and 2.9%, respectively. It did not publish new estimates. The bank has cited export and investment performance in the semiconductor sector as growth drivers.
Consumer inflation rose 2.9% year over year in September, while core inflation, which excludes food and energy, was 2.8%, according to the Ministry of Finance and Economy. The BOK’s target is 2%. The bank cited accumulated cost pressures, including oil and semiconductor prices, as well as gradually strengthening demand, as inflation risks.
Household lending showed mixed trends: total loans declined as other loans were repaid on net, while housing-related lending increased, the BOK said. Home-price increases in Seoul and surrounding areas also accelerated again. The bank separately cited financial-stability risks among the factors for future decisions. EconoTimes previously covered the BOK’s rate hold amid inflation and housing-debt risks.
The BOK’s advance estimate for third-quarter GDP is scheduled for Monday, Oct. 26, at 7 p.m. ET (23:00 UTC). The next Monetary Policy Board meeting is scheduled for Nov. 26.
