The news that the Bank of Korea has decided to maintain the base interest rate at 2.5% is something many people have been paying attention to. This decision is positioned as a continuation of the five consecutive rate freezes since July of last year, and it is expected to have a significant impact on the financial market. A deeper understanding of this decision, influenced by concerns over exchange rate volatility and real estate and household debt, is necessary. Now, let’s check the specific details below.
The Bank of Korea has decided to maintain the base interest rate at 2.5% in its first monetary policy meeting of 2026. This decision continues the trend of five consecutive rate freezes since July of last year.
The Monetary Policy Committee unanimously voted to freeze the rate at this meeting, which is analyzed as a measure considering the recent volatility of the won-dollar exchange rate, which has approached 1,480 won, and the pressure of the won’s depreciation. It reflects the concern that further rate cuts could increase instability in the foreign exchange market.
Bank of Korea Governor Lee Chang-yong stated at a press conference, “The exchange rate was one of the important factors in this decision, and both the fundamental strength of the domestic economy and global supply-demand factors had an impact.”
Additionally, the rising trend of apartment prices in Seoul and the increase in household loans also played a role in the decision to freeze rates. Since the signals of overheating in the real estate market have not completely subsided, it is interpreted as meaning that a shift to a more accommodative monetary policy will be carefully considered for the time being.
Meanwhile, the expression related to rate cuts was removed from the resolution document at this meeting, suggesting that the Monetary Policy Committee has taken a step back from signaling future easing policies. It is reported that in the next meeting scheduled in three months, five out of six members voted to maintain the rate, while one mentioned the possibility of a cut.
Currently, the difference in base interest rates between South Korea and the United States remains at 1.25 percentage points.
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