| Bank of Korea Gov. Rhee Chang-yong bangs the gavel at a monetary policy board meeting held at the central bank on Thursday. (Joint Press Corps.-Yonhap) |
The Bank of Korea held its base interest rate steady at 2.5 percent for the third consecutive meeting due to uncertainties surrounding the property market and the valuation of the local currency.
With the latest decision, the rate has remained unchanged for the past five months, following cuts in February and May.
The move reflects the central bank’s cautious stance amid lingering uncertainties in the heated real estate market.
“The BOK has no intention of fueling the real estate market by injecting more liquidity,” Gov. Rhee Chang-yong said during a National Assembly audit Monday.
Recent volatility in the won–dollar exchange rate, driven by uncertainty over tariff negotiations with the US, also supported the decision to keep the rate on hold.
The won was quoted at 1,431 per dollar as of closing on Oct. 14, depreciating to its weakest level in over five months. Since then, the won's valuation has not strengthened.
With the sharp depreciation of the won, foreign exchange authorities issued a verbal intervention earlier in October. It was the first time the forex authorities issued a joint verbal intervention on the market since April 2024.
A rate cut could further widen the rate gap with the US Federal Reserve, potentially triggering capital outflows and increasing downward pressure on the Korean won.
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