Overview

• The central bank kept its policy rate unchanged for a second straight meeting, maintaining a cautious pause after earlier 2025 cuts totaling 0.5 percentage points.
• The BOK raised its 2025 growth forecast to 0.9% from 0.8%, in line with the Finance Ministry’s projection and between IMF (0.8%) and OECD (1.0%) views.
• Policymakers cited firmer private consumption and government supplementary spending, with a recent U.S. deal lowering some reciprocal tariffs to 15% from 25% and large investment pledges helping ease trade headwinds.
• Governor Rhee flagged financial-stability risks as some Seoul home prices continue to climb and household debt remains elevated, while the weak won near 1,400 per dollar reflects a wide U.S. rate gap.
• Inflation ran at 2.1% in July, close to target, and some analysts, including Bank of America, say the backdrop could allow rate cuts within months, possibly starting in October.