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BOK maintains 2.5 percent interest rate for third consecutive meeting this month

Published: 23 Oct. 2025, 10:38

Bank of Korea Gov. Rhee Chang-yong strikes the gavel during a Monetary Policy Board meeting at the central bank’s headquarters in central Seoul on May 29. [YONHAP]

The Bank of Korea (BOK) held its key interest rate steady at 2.5 percent for the third consecutive time Thursday, citing concerns that a rate cut could send mixed signals to the market amid the government's latest real estate measures.

The BOK's decision to keep the benchmark rate unchanged was made during its monetary policy board meeting on Thursday.

The central bank’s decision comes as the won continues to weaken, with the exchange rate recently hitting the 1,430-won range against the U.S. dollar. Policymakers were also wary that a premature rate cut could worsen volatility in the foreign exchange market.

Since May, the rate has remained at 2.5 percent. The decision maintains the interest rate gap between Korea and the United States at 1.75 percentage points. The central bank had lowered the rate four times between October 2024 and May 2025, by a total of 1 percentage point, to support economic recovery.

The outlook for additional cuts remains uncertain.

Asset prices, particularly in the real estate sector, continue to show signs of overheating. Robust semiconductor exports are raising expectations for stronger economic growth next year, reducing pressure for further monetary easing. Should housing prices remain elevated, the BOK may refrain from any additional rate cuts this year.

On the other hand, financial markets are anticipating two rate cuts by the U.S. Federal Reserve before year’s end, which could narrow the Korea-U.S. interest rate differential even further.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM NAM-JUN [[email protected]]