The Bank of Korea retained its interest rate on Thursday as inflation remained stable and economic growth continued to improve amid rising concerns over the heated property market.
The Monetary Policy Board of the Bank of Korea decided to leave the Base Rate unchanged at 2.50 percent.
The central bank had previously lowered the benchmark rate by a quarter-point each in May and February.
“…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 in a statement.
Although inflation remained stable and economic growth continued to improve driven by consumption and exports, there is still high uncertainty around the growth outlook, policymakers said.
Also, policymakers assessed that it is necessary to further monitor financial stability conditions, such as the effects of real estate market stabilization measures on housing markets in Seoul and its surrounding areas and on household debt, as well as exchange rate volatility.
ING economist Min Joo Kang said the next rate cut will largely hinge on how housing markets respond to the maroprudential measures.
The bank is likely to resume its rate cuts in the first quarter of 2026, the economist said.
“By that time, uncertainties related to US tariffs may be resolved, the Federal Reserve may have implemented additional rate cuts, and the housing market may show signs of stabilization,” she added.
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