Bank of Korea Raises Rate to 3%
Bank of Korea raised its interest rate to 3%. This is the second increase in a row.
The 25-basis-point hike matched expectations. It is the highest rate since January 2025.
The bank pointed to concerns about inflation. It also worried about Seoul property prices.
Household debt was another concern. Core inflation stayed high.
It rose 2.6% year on year in July. That was the sharpest increase since December 2023.
The bank raised its 2026 growth forecast to 3.3%. That is up from 2.6%.
Stronger exports and demand drove the change. It kept inflation forecasts steady. Those are 2.7% for 2026 and 2.3% for 2027.
Klear Note — Twenty-five basis points equal 0.25 percentage points. Higher rates can make loans cost more and slow inflation.
Key Terms 3
- basis point A tiny unit used to measure interest rate changes. 100 equals 1%.
- Bank of Korea South Korea's central bank which sets interest rates.
- core inflation Price increases excluding volatile items like food and fuel.