Home > Business > Finance

BOK maintains 2.5 percent key rate for 8th consecutive meeting

Published: 28 May. 2026, 10:29 Updated: 28 May. 2026, 10:49

Bank of Korea Gov. Shin Hyun-song holds up a gravel during the Monetary Policy Board meeting at the Bank of Korea in Jung District, central Seoul, on May 28. [JOINT PRESS CORPS]

The Bank of Korea (BOK) left its benchmark rate unchanged at 2.5 percent on Thursday for the eighth meeting in a row, even as rising inflation and stronger-than-expected growth fueled speculation that a rate hike could come before the end of the year.

After cutting the rate by a cumulative 100 basis points from 3.5 percent beginning in October 2024, the central bank's Monetary Policy Board has held rates steady since July 2025.

The decision to stand pat once again reflects the BOK's desire to monitor whether the secondary inflationary effects of high oil prices — prolonged by the fallout from the Iran war — continue to feed through to consumer prices. At the same time, the benefits of the semiconductor boom have yet to filter through to the broader domestic economy, with small businesses, self-employed workers and lower-income households continuing to struggle even as the technology sector thrives — a divergence that has complicated the rate decision.

Markets are increasingly betting on a rate hike before the end of the year. Consumer price inflation rose to 2.6 percent on year in April, up from 2.2 percent in March and above the BOK's 2 percent target. First-quarter real GDP growth of 1.7 percent on quarter also came in stronger than expected, adding to the case for tightening. A persistently weak won could further amplify calls for a rate rise, given that Korea's benchmark rate currently sits 1.25 percentage points below the upper bound of the U.S. Federal Reserve's target range, a gap that analysts say is stoking demand for dollars.

The BOK also released its revised economic outlook on Thursday, raising its 2026 growth forecast from 2 percent to 2.6 percent and lifting its inflation forecast from 2.2 percent to 2.7 percent.

"The simultaneous upward revision of both the growth and inflation forecasts could naturally act as a factor increasing the likelihood of a benchmark rate hike," said Kim Yu-mi, an analyst at Kiwoom Securities.

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]]