[Young Journalist Yumin Chung]  The Bank of Korea (BOK) has maintained its base interest rate at 3.0% to take a pause after two consecutive rate hikes. The decision has been made to examine the impact of previous cases and check on domestic and global uncertainties after the two cases in July and August.

At its monetary policy meeting on October 22nd, all members of the Bank of Korea’s Monetary Policy Board have voted to keep the benchmark rate at 3.0%. The decision was unanimous. It could be inferred that the central bank decided to manage the tightening of the rate hike cycle, while also evaluating the effect of two previous cases. 

The BOK has cut the interest rates four times in the past, in October and November of 2024 and February and May of 2025. After the four cases, they held meetings and concurred on keeping it the same consecutively for eight times, in May 2026. It resumed on raising the benchmark rates in July after three and a half years of keeping them constant, due to a semiconductor-led economic recovery and inflation concerns rising from conflicts in the Middle East. Extra rate hikes continued in August.

The BOK noted that exports and investments promoted the strong expansion of the domestic economy in its monetary policy statement, while inflation stayed elevated around 3% along with continued financial stability risks. Nevertheless, increased uncertainty about the Middle East conflicts and monetary and fiscal policies in economies caused the need to maintain rates while accounting for and evaluating external risks and impacts of previous hikes.

The underlying reasons for the central bank to slow down the tightening of the rate hike cycle include inflationary trends and economic growth. High demand for semiconductors has further promoted exports and investment, while improving income conditions are expected to gradually strengthen the recovery in consumption. As a result, the BOK predicts economic growth in both 2026 and 2027 to significantly go beyond previous expectations in its August forecasts of 3.3% and 2.9%, respectively.

In September, consumer price inflation reached 2.9%, while core inflation reached 2.8%, both remaining similar on the the upper end of 2%. Short-term inflation expectations among consumers also remained at approximately the same level.

The BOK predicts inflation to stay higher than its target for some period of time due to the pass-through of cost pressures and rise in demand pressure. Consumer and core inflation for 2026 are estimated to correspond with August forecasts of 2.7% and 2.5%, while inflation in 2027 is projected to outdo previous expectations. There are existing uncertainties and variables including oil prices, exchange rates, the pace of domestic demand recovery and wage growth.

The Monetary Policy Board will monitor economic growth while maintaining a policy stance to make sure that inflation stabilizes at least around the target level over the mid-term, while continuing to pay attention to financial stability. 

The board expects strong growth persistence of the Korean economy, supported by exports, investment and recovery in consumption, yet inflation is expected to exceed the target inflationary level for some time. It also cautioned financial imbalances in the Seoul housing market and household debt. Additional rate hikes will depend on inflation, economic conditions and financial stability risks.

▶원문 기사: “인상 효과 점검” 한은, 기준금리 연 3.0%로 ‘만장일치 동결’ (이코노미스트, 2026. 10.22)
 

 ◆이코노미스트가 글로벌 차세대 경제 리더, 청소년 기자단 영 저널리스트와 함께합니다. 영 저널리스트 기자단은 프리미엄 경제지 이코노미스트, 논술 전문 기관 Ni 에듀케이션과 함께 주요 시사 이슈를 팔로우업하고 직접 기획, 취재, 기사 작성 활동을 하며 사회적 문제를 고심하고 해결 방안을 제시하는 과정을 경험하게 됩니다. 이번 기사는 영 저널리스트 기자단이 이코노미스트 기사를 영문으로 번역하며 이슈를 팔로우업한 기사입니다. 차세대 글로벌 경제 리더, <영 저널리스트 with  이코노미스트> 영문 기사는 매주 연재됩니다.

ⓒ이코노미스트(https://economist.co.kr) '내일을 위한 경제뉴스 이코노미스트' 무단 전재 및 재배포 금지