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Inflation and Growth Concerns Influence Bank of Korea's 3.50% Base Rate.

Source: Bank of Korea

Seoul, South Korea - The Monetary Policy Committee of the Bank of Korea decided to keep the key interest rate unchanged at 3.50%. 

The decision was influenced by several variables affecting inflation and growth, both domestically and internationally.


  • Policy rate: Maintained at 3.50%.
  • Global factors: Extended restrictive monetary policies in leading economies add variables.
  • Inflation: Up to 3.7% in September from August, influenced by energy and agricultural sectors.
  • Market volatility: Affected by Federal Reserve signals and geopolitical elements.

International Economic Conditions:

Global economic expansion is slowing. 

Contributing factors include continued restrictive monetary policies in major economies. 

U.S. consumer price inflation was 3.7% in September, the same as in August; core inflation declined to 4.1% from 4.3%. 

International financial markets experienced increased volatility, including rising Treasury yields and a strengthening U.S. dollar.

Domestic Projections:

GDP growth is expected to align with the previous forecast of 1.4%. 

The economy continues to expand at a modest pace, with a slow recovery in consumer spending. 

Unemployment metrics are stable, and payrolls are strong. 

Consumer price inflation is expected to fall into the low 3% range by the end of the year, with further moderation scheduled in 2024.

Markets and household debt:

Increased volatility was observed in South Korean long-term government bond yields and USD/KRW exchange rates—a decline in stock market indices. 

Reduced risk in some non-bank financial sectors. Housing prices continue to rise, especially in Seoul and surrounding areas. Increase in household credit, especially for housing.

Monetary policy:

Policy targets focus on stabilizing consumer price inflation over the medium term. 

The current restrictive monetary stance will be maintained to prioritize price stability. 

Future adjustments in policy rates will depend on several factors, including inflation data, economic conditions, and geopolitical events.