(2nd LD) BOK raises key rate for 2nd consecutive session to 3 pct, revises up 2026 forecast to 3.3 pct

The Bank of Korea (BOK) increased the benchmark interest rate by 0.25 percentage points for the second consecutive meeting on Thursday, bringing the key rate to 3 percent. This move came as the central bank sought to curb rising inflationary pressures. The Monetary Policy Board marked the highest level since January 2025 and delivered its first rate hike in 3.5 years, following a July hike.

The decision was made to prevent inflation from becoming widespread and to maintain financial stability. While six out of seven board members supported the hike, Hwang Kun-il voted against it, advocating for keeping the base rate at 2.75 percent. The BOK maintains a hawkish stance due to high oil prices, geopolitical tensions in the Middle East, and strong economic recovery.

Despite a slight dip to 2.8 percent in July, consumer prices still remain well above the 2 percent target. The central bank has also revised its growth forecast for 2026 upwards to 3.3 percent from the previously estimated 2.6 percent, with a projection of 2.9 percent for 2027.