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BOK holds benchmark rate at 2.5 percent in first monetary meeting since Iran war

Published: 10 Apr. 2026, 12:25 Updated: 10 Apr. 2026, 12:42

Bank of Korea Governor Rhee Chang-yong strikes the gavel during a Monetary Policy Board meeting at the central bank’s headquarters in central Seoul on Jan. 15. [NEWS1]

The Bank of Korea (BOK) maintained the benchmark interest rate at 2.50 percent per year following a rate-setting meeting on Friday.

It has held the rate steady for a seventh consecutive time, with no change since July 2025.

As this was the central bank’s first Monetary Policy Board meeting since the outbreak of the Iran war, the decision is seen as a cautious approach to monetary policy while monitoring developments in the Middle East.

Experts believe that with exchange rate volatility still high and inflation remaining unstable, it is difficult to cut rates hastily. At the same time, raising interest rates is also challenging, given concerns that the conflict could dampen the economy, leaving a rate hold as the only viable option.

“Monetary policy needs to maintain a cautious and neutral stance, watching changes in domestic and external conditions and the flow of economic indicators, rather than forming expectations about a specific direction,” the BOK noted in its monetary and credit policy report last month.

Some experts, however, project a rate hike within the year remains possible if prolonged tensions in the Middle East entrench a structure of high oil prices and high inflation.

Rhee Chang-yong, the governor of the BOK , also held a press briefing after chairing his final Monetary Policy Board meeting the same day. The market is closely watching how the board assesses inflation and economic conditions.

Shin Hyun-song, the nominee for the next BOK governor, said in written responses submitted to the National Assembly that “a monetary policy response is unnecessary for temporary energy supply shocks.”

He added, “If such shocks persist for a prolonged period, their impact on inflation and growth would increase, and a policy response should be considered.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY OH HYO-JEONG [[email protected]]