Bank Of Korea Keeps Rates Steady

(RTTNews) - The Bank of Korea left its interest rate unchanged on Thursday but kept the door open for rate hikes as both inflation and economic growth forecasts exceed previous projections.

At the first meeting of Shin Hyun Song as governor, the policy board decided to hold the base rate at 2.50 percent.

Five board members voted to retain the base rate, while two members proposed to hike it by 25 basis points.

The board said it will decide the timing of any rate hikes while assessing the extent of the increase in inflationary pressure, the improvement trend in the domestic economy, and financial stability.

The domestic economy is forecast to continue its improvement trend, underpinned by a strong semiconductor sector and the supplementary budget. The growth outlook for this year was revised up to 2.6 percent from 2.0 percent.

Consumer price inflation rose to 2.6 percent in April due to a sharp rise in petroleum product prices.

Looking ahead, the bank said inflation will rise further, as the spillover effects of higher global oil prices expand and as demand-side pressure stemming from income growth also gradually strengthen.

The bank upgraded consumer and core inflation projections for 2026. Consumer price inflation forecast was revised up to 2.7 percent from 2.2 percent and core inflation outlook to 2.4 percent, from 2.1 percent.