Market Update: BOK maintains benchmark interest rate amid economic uncertainty – Full Analysis

 

The Bank of Korea kept its benchmark interest rate unchanged at 2.50 percent on Thursday.

 

The bank’s monetary policy board held a rate-setting meeting on Thursday morning and announced it would freeze the benchmark rate. It marks the sixth consecutive hold since the bank cut the rate by 0.25 percentage point in May last year.

 


 

The decision likely reflects concerns that volatility in the foreign exchange market remains high. Although the won-dollar exchange rate has stabilized slightly since the January rate decision, it remains elevated in the mid-1,400-won range, indicating a relatively weak won.

 

The possibility that the foreign exchange market could fluctuate again, depending on U.S. President Donald Trump’s global tariff policies and the direction of the Federal Reserve’s rate decisions, also plays a major role in changes to Korea’s policy.

 

An overheated real estate market is another factor constraining a rate cut. While the government has maintained its commitment to stabilizing the property market, a rate reduction could further fuel housing prices at a time when Seoul apartment sale prices have risen for 54 consecutive weeks.

 

The need for a rate cut has also eased as the economy shows signs of recovery, led by a rebound in semiconductor exports.

 

The Bank of Korea is set to release its revised economic outlook later in the day.

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 YOON SO-YEON [[email protected]]