Bank of Korea lifts the policy rate to 3% for a second straight meeting
Six of seven board members voted for a 25-basis-point rise. Growth for 2026 was revised to 3.3% from 2.6% on semiconductor exports. The median dot for the next six months is 3.25%. Household credit has passed 2 quadrillion won.
Seoul1 min read
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The Bank of Korea raised the seven-day repurchase rate by 25 basis points to 3.00% on Thursday, the second increase in as many meetings and the first time the benchmark has sat at 3% since November 2024. Six members of the Monetary Policy Board voted to hike. One wanted no change. The last back-to-back rises were in October and November 2022.
Governor Shin Hyun-song’s board also lifted the 2026 growth forecast to 3.3% from the 2.6% published in May. Second-quarter GDP grew 0.6% on the previous quarter against a 0.2% staff forecast. Semiconductor exports carried the print. Real gross domestic income, a measure of household purchasing power, jumped 3.6% quarter on quarter and 15.6% year on year. That strength is the inflation problem the hike is aimed at. Middle East disruption is the other.
Debt at 2 quadrillion won
Household credit passed 2 quadrillion won, about $1.4 trillion, at the end of June. The board’s dot plot puts the median rate at 3.25% six months from now. Markets had been split before the decision. After it, the 91-day CD yield jumped 15 basis points to 3.12% while longer Treasury yields fell.
A central bank that spent 18 months below 3% has now used two meetings to climb back. The growth upgrade tells firms the chip cycle is real. The second hike tells households the board will not wait for the next inflation print before using the rate again.
