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Bank of Korea Holds Rate Steady for 12th Time — Update

By Kwanwoo Jun


South Korea's central bank held its base rate steady in a move that was widely anticipated but comes alongside growing expectations that it could be gearing up to pivot towards policy easing in the coming months.

The Bank of Korea on Thursday kept its benchmark seven-day repurchase rate unchanged at a 15-year high of 3.50% for a 12th straight time.

All 26 economists surveyed by The Wall Street Journal had expected the bank to stand pat in July, with some penciling in a rate cut as early as in August and most forecasting the start of policy easing in October or November.

Economists think the central bank may want to wait for second-quarter growth data and July inflation figures to better gauge how the South Korean economy is faring before it moves on rates.

BOK policy makers also have their eye on the U.S. Federal Reserve policy meeting due later this month.

Easing inflation in South Korea has put pressure on the BOK to lower interest rates, with the country's headline inflation having slowed to an 11-month low of 2.4% in June.

Sluggish domestic demand and signs of financial distress caused by higher interest rates also back the case for the bank to lower borrowing costs to help spur growth in the country.

Still, the BOK is widely expected to tread cautiously, wary about rushing rate cuts due to uncertainty around the U.S.'s monetary policy path and high levels household debt in South Korea.

The BOK expects South Korea's economy to grow 2.5% this year, with inflation forecast to average 2.6%. It expects economic growth to slow to 2.1% next year, with inflation likely to ease to 2.1% as well.


Write to Kwanwoo Jun at


(END) Dow Jones Newswires

July 10, 2024 21:10 ET (01:10 GMT)

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