S. Korea keeps rates unchanged, economic growth forecast raised

South Korea’s central bank held policy interest rates steady for a second straight review amid concerns about housing market risks

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South Korea's central bank held policy interest rates steady for a second straight review on Thursday amid concerns about housing market risks but flagged further easing to counter the hit to growth from US tariffs.

The Bank of Korea’s monetary policy board voted 6-1 to keep its benchmark interest rate unchanged at 2.50 per cent, in line with expectations. It also revised up growth forecast for this year to 0.9 per cent from 0.8 per cent previously, which would still mark the slowest expansion since 2020.

“There is a big chance for the current easing stance to stay at least through the first half of next year as growth is likely to stay low until the first half, in quarterly terms, before it reaches close to the economy's potential rate in the second half,” Governor Rhee Chang-yong said in a news conference.

Shin Sung-hwan, known for favoring lower interest rates, made Thursday's sole dissenting vote and called for an immediate 25 basis point cut.

With the US Federal Reserve inching toward a rate cut, analysts expect the BOK to resume easing in the fourth quarter as the sputtering economic recovery reduces concerns about an uptick in inflation.

The central bank on Thursday raised its economic growth forecast for the Republic of Korea to 0.9 per cent for this year, reported Yonhap News Agency.