Bank of Korea Pauses at 3% After Back-to-Back Rate Hikes as Inflation Stays Above Target

The Bank of Korea held its benchmark interest rate steady at 3% on Thursday, pausing after two consecutive quarter-point increases in July and August that marked its first back-to-back hikes in more than three years. The decision was widely expected, with all 24 economists surveyed by Bloomberg and a separate Reuters poll forecasting a hold.

Inflation in South Korea came in at 2.9% in September, keeping price growth at or above the central bank's 2% target for 13 consecutive months. A semiconductor boom has powered relatively resilient economic growth, adding further upward pressure on prices. The hold also comes in the context of President Lee Jae Myung calling for an "all out effort" to boost housing supply.

Analysts at ING said the pause is unlikely to signal the end of the tightening cycle, as elevated inflation and solid growth leave room for further increases. The central bank is widely seen as taking stock of the cumulative impact of its recent hikes before deciding its next move.