South Korea's central bank left its key interest rate unchanged at 3.00% on Thursday, 22 October 2026, pausing after two consecutive increases. All seven board members voted for the hold, and all 34 analysts in a Reuters poll had expected it. But the Bank of Korea (BoK) made clear that more rate rises are possible.
A pause, not the end
The BoK raised rates by a quarter point in both July and August, its first back-to-back hikes in more than three years. It said further tightening remains "on the table," according to Reuters.
Governor Shin Hyun Song said the pause "bought ourselves time" to judge the impact of the earlier increases, adding: "We will continue to respond until we are confident" that inflation is on track, Korea JoongAng Daily reported.
Chips and AI drive a boom
The bank raised its forecasts for growth in 2026 and 2027 well above the 3.3% and 2.9% it projected in August, driven by booming exports of chips and AI-related products. South Korea's exports are projected to reach $1 trillion this year, and shipments in January–September topped $800 billion for the first time.
It also raised its inflation forecasts for next year above the August projections of 2.3% headline and 2.5% core. Headline inflation slowed to 2.9% in September from 3.1% in August.
A stronger won
The won stood at 1,324.2 per dollar on 22 October, much stronger than the mid-1,500s it reached in June, and Shin said it still has room to strengthen.
What analysts expect
| Forecaster | View |
|---|---|
| Reuters poll median | Hike to 3.25% in November |
| Daishin Securities | Peak rate of 3.5% |
| Samsung Securities | Peak rate of 3.75% |
| Capital Economics (Gareth Leather) | Doubts the hold "marks the end of the tightening cycle" |
South Korea is unusual among major economies in raising rates this year, a sign of how strongly the global AI boom is lifting its chip industry. The Bank of England also looks set to raise rates in November.
