- Bank of Korea holds benchmark rate at 2.50%.
- Central bank raises 2026 growth forecast to 2.0%.
- Inflation outlook for 2026 increased to 2.2%.
- Housing prices and weaker won cited as risks.
BOK maintained its 2.50% seven-day rate of repurchases on Thursday, bringing a sixth straight meeting to an ongoing pause that has existed since May 2025. The monolithic 22-out-of-22 consensus, which was in line with the forecasts of all participants in the Bloomberg consolidation as well as the 34 surveyed by Reuters, was achieved as both growth and inflation upgrades allowed the policymaking position to keep an eye on financial risks without changing the policy.
Outlook Growth Revisited Higher, Inflation Forecast Bumped Up.
The BOK increased its 2026 growth projection of its GDP to 2.0 per cent as compared to 1.8 per cent forecast that they had given in November in relation to the fact that it was facing a boom in its semiconductor export and a restoration of its private consumption.
The exports of South Korea shot up by 34 per cent on a year-on-year basis in January and semiconductor exports (which comprise over a quarter of aggregate exports) increased twice the same amount in the same time. The updated growth projection is at par with the economic forecast of the government itself and poses comparatively low against the 1.9 per cent growth forecasts of the International Monetary Fund and the Korea Development Institute.
The central bank had also moved its consumer price inflation expectation in 2026 to 2.2 per cent, up by half percent, citing increasing global oil prices attributed by global oil geopolitical risks. BOK projects a 1.8 per cent growth and 2.0 per cent inflation, which is for 2027.
Weak Won Anchor the Hold Decision: Housing Rally.
The deliberations on Thursday were dominated by issues that related to financial stability. Prices of apartments in Seoul increased in 55 consecutive weeks in which it rose by 0.15 per cent in the 7 days spanning up until February 16, according to the Korea Real Estate Board. In Seoul, where the apartment price rate has been shown to increase at a high rate of 8.98 per cent in 2025 (the largest rises in the years since 2013), households debts are also piling up.
President Lee Jae Myung has threatened through words against multi-home owners and said that the real estate is the source of all the issues in this country. Meanwhile, the Korean won has fallen 5.2 per cent since the most recent reduction in rates in May, and this attracts attention of the US Treasury.
To stem out excessive volatility of the won, the authorities permitted a foreign exchange swapping line between the National Pension Service and the BOK. The consumer price inflation dropped to five-month low of 2.0 per cent in January, which is consonant to the BOK target which has left the policy with minimal reasons and justifications to change towards either direction.
BOK Scraps Three-Month Advice, adopts Fed-type dot plot.
Tuesday In a policy communication change of structure, the BOK on Thursday substituted its three months forward guidance issue, previously made in October 2022, with a six-month rate forecasting system, based on the US Federal Reserve dot plot.
All the members of the Monetary Policy Board will now publish 3 individual rate dots in a quarter, i.e. in February, May, August and November, enabling them to encourage probabilistic signalling of the policy rate path.
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The BOK Governor remarked that the six months horizon was considered suitable considering that the South Korean is a small open economy that is especially susceptible to any external shock. Majority forecasts the 2.5 per cent rate will stay constant until 2026 with some sounding an alert of a tightening bias that will develop in 2027 in case growth and asset prices keep strengthening.
