Bank of Korea holds rates after President Lee calls for boosting housing supply
Economists polled by Reuters had forecast the Bank of Korea to hold rates.
Key points
- South Korea's central bank kept its policy rate at 3% on Thursday after two straight hikes.
- September inflation was 2.9%, at or above the BOK's 2% target for 13 months.
- September exports rose a record 83.7% year on year, with semiconductors up over 262%.
South Korea's central bank held its policy rate at 3% on Thursday, as expected, following two consecutive hikes. Economists polled by Reuters had predicted the pause. Analysts said the decision does not signal a change in policy stance while inflation remains elevated.
The decision comes after President Lee Jae Myung reportedly called for an "all out effort" to boost housing supply. Inflation in Asia's fourth-largest economy was 2.9% in September, staying at or above the Bank of Korea's 2% target for 13 months.
Market reaction and analyst view
The Kospi was trading 1.23% lower, while the won strengthened marginally against the dollar to 1,326.1.
Analysts from Dutch bank ING said the pause was unlikely to mark the end of the tightening cycle, citing inflation above target and relatively resilient economic growth.
all out effort
— President Lee Jae Myung
Export growth supports economy
Growth has been largely supported by semiconductor exports as demand for chips powering the AI boom continues. September exports jumped a record 83.7% year on year, with semiconductors up more than 262% from a year earlier.
The IMF projects South Korea's growth at 3.3% for the whole of 2026. GDP growth was 3.8% in the first quarter and 3.7% in the second, both beating expectations.
