Bank of Korea Holds Interest Rate at 3 Percent

The Bank of Korea maintained its benchmark interest rate at 3 percent on October 22, pausing after consecutive quarter-point increases in July and August. The decision aligns with analyst forecasts as headline consumer inflation remained at 2.9 percent in September, exceeding the central bank's 2 percent target for 13 consecutive months.

Governor Shin Hyun Song indicated that monetary policy will remain restrictive until inflation converges to the target. This pause occurs alongside reports that President Lee Jae Myung called for an "all out effort" to increase the national housing supply.

South Korea's economic growth remains resilient, supported by an artificial intelligence boom that drove September semiconductor exports up 83.7 percent year-on-year. Despite the current hold, some analysts forecast the tightening cycle may continue with a potential rate increase to 3.25 percent in November.