Financial News: Bank Of Korea Keeps Policy Rate On Hold

Bank Of Korea Keeps Policy Rate On Hold

02/26/2026 - 01:58:00 (RTTNews)

(RTTNews) - The Bank of Korea maintained its key interest rate and signaled a neutral policy stance in its new six-month dot plot framework.

The Monetary Policy Board unanimously decided to leave the Base Rate unchanged at 2.50 percent, on Thursday.

The central bank had previously lowered the benchmark rate by a quarter-point each in May and February 2025.

The BoK today announced its first 6-month dot plot framework, which is similar to the US Federal Reserve.

The BoK extended the horizon of base rate projection from three months to six months. The bank said the new framework will enhance the effectiveness of policy communication.

The new dot plot suggested that the policy rate will remain at 2.5 percent in six months.

The board noted that the economy continued its improving trend, underpinned by a recovery in consumption and strong exports. The bank raised its growth outlook for this year to 2.0 percent from 1.8 percent.

However, the bank cautioned that there remains both upside and downside risks along the future path of economic growth related to developments in the semiconductor industry, the pace of recovery in domestic demand, monetary and fiscal policies in major economies, US tariff policies, and geopolitical risks.

Citing upward cost pressures on some items, the bank raised consumer price inflation for 2026 to 2.2 percent from the November forecast of 2.1 percent. The forecast for core inflation was lifted to 2.1 percent from 2.0 percent.

ING economist Min Joo Kang said upward revisions to 2026 growth and inflation forecasts indicate there is little justification for maintaining an easing stance. The central bank is likely to hold rates steady throughout 2026, the economist said. She noted that the odds of a hike in the fourth quarter will increase if growth and prices accelerate more than expected.

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