Aerial view of Seoul downtown city skyline with vehicle on expressway and bridge cross over Han river in Seoul city, South Korea.
Mongkol Chuewong | Moment | Getty Images
South Korea’s central bank kept its policy rate unchanged at 2.5% for its second straight meeting despite an uncertain trade environment for the country.
The move was also in line with expectations of economists polled by Reuters.
In its previous meeting, the BOK had held rates, citing a need to assess the impact of recent measures aimed at cooling Seoul’s housing market.
The central bank decision came just days after South Korean President Lee Jae Myung met U.S. President Donald Trump earlier this week, which led to a series of agreements between both sides.
These include multibillion-dollar investment pledges from South Korean companies, record $50 billion aviation purchases by Korean Air, and cooperation in areas such as shipbuilding and energy.
Under a July trade deal, Seoul would invest $350 billion in the U.S., including $150 billion for shipbuilding. Seoul then saw its so-called “reciprocal” tariffs for its exports to the U.S lowered to 15% from 25%, including for automobiles.
The country had seen net exports power its growth in the April to June period to a better-than-expected showing, with GDP expanding 0.6% quarter over quarter and 0.5% from a year ago.
Exports of goods and services make up about 44% of South Korea’s GDP in 2023, according to the latest figures from the World Bank, with the U.S. as its second-largest export market, after China.
A note by Bank of America analysts said that with “easing trade headwinds,” the BOK is expected to revise its GDP growth projection to around 1.0% for 2025, up from 0.8% previously.
The analysts forecast that the BOK would be open to cutting its policy rates in the next three months, with a possible rate cut in October.
They also expected another cut in the first half of 2026 to keep rates stable at 2%.
Inflation in South Korea, however, seems supportive of a rate cut, coming at 2.1% in July and just above the BOK’s target of 2%.
— This is breaking news, please check back for updates.
