The Bank of Korea (BOK) continued to keep the interest rate at 2.5% as inflation remains stable and economic growth shows modest improvement. The central bank cited the need to monitor the housing prices and household debt in Seoul following the 19% soaring back in June.
BOK also stated the price is likely to grow higher but it also noticed that household loan growth has slowed down significantly. As for the inflation rate and economic growth, the central bank had made its adjustment to their 2025 forecasts.
Despite achieving an inflation rate of 2.1% in July, slightly above the 2025 inflation target of 1.9%, BOK now lifted that estimation to 2%. For economic growth, the GDP improved better than expected, leading to the lift of this year’s forecast from 0.8% growth to 0.9%.
The central also held its interest rate in its last meeting in July as it needed to evaluate the impact of financial authorities’ measures, recently implemented to support the housing market following price spiking.
Analysts from Bank of America estimated that BOK may cut the interest rate soon within the next three months, likely this October, and one more in the first half of 2026 to keep the rate at 2%.
