Financial News: Bank Of Korea Stands Pat On Rates, Lifts

Bank Of Korea Stands Pat On Rates, Lifts 2025 Growth Outlook

08/28/2025 - 06:12:00 (RTTNews)

(RTTNews) - The Bank of Korea left its interest rate unchanged on Thursday as economic growth improved moderately despite high uncertainty surrounding the outlook.

The Monetary Policy Board decided to hold the Base Rate at 2.50 percent.

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

Policymakers cautioned that development in housing prices in Seoul and its surrounding areas and in household debt need to be monitored as expectations for rising prices remain high.

The bank expects inflation to remain at around 2 percent due to subdued demand-side pressure and due to the stabilization of global oil prices. The bank lifted its inflation forecast for this year to 2 percent from 1.9 percent.

Citing the recovery in consumption, consumer price inflation and core inflation are both forecast to be 1.9 percent, slightly above the previous forecast of 1.8 percent. The bank upgraded its economic growth projection to 0.9 percent for this year from 0.8 percent estimated in May as fiscal stimulus is set to underpin domestic demand. The outlook for next year was retained at 1.6 percent.

The bank noted high uncertainty around the future path of economic growth concerning trade negotiations between the US and China and concerning the imposition of product-specific tariffs, and also the pace of recovery in domestic demand.

"The Board will maintain its rate cut stance to mitigate downside risks to economic growth and adjust the timing and pace of any further Base Rate cuts while closely monitoring changes in domestic and external policy conditions and examining the resulting impact on inflation and financial stability," the bank said.

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