Bank of Korea raises rate to 3% amid inflation concerns

Bank of Korea hikes rate to 3% for a second time, aiming to curb inflation and stabilize the won amid rising prices and persistent core inflation.

The Bank of Korea has raised its benchmark interest rate by 25 basis points to 3%, marking the second consecutive increase and the highest level since January 2025. This move comes in response to persistent core inflation, which reached 2.6% in July, and a 2.5% rise in Seoul housing prices in June. Although headline inflation eased to 2.8% in July, the central bank believes a restrictive monetary policy is necessary to control inflationary pressures and stabilize the won. The currency strengthened following the announcement. Additionally, the Bank of Korea revised its economic growth estimate for the year upward to 3.3% and maintained its annual inflation forecast at 2.7%. The decision was not unanimous, and future policy will depend on inflation, growth, and financial stability trends.