The Bank of Korea held its policy rate steady at 3% on Thursday. The pause followed two consecutive increases. Economists polled by Reuters expected the central bank to stop raising rates.
The decision comes after South Korean President Lee Jae Myung reportedly called for an "all out effort" to boost housing supply. Analysts from Dutch Bank ING noted that the pause does not signal a change in overall policy stance. Inflation remains elevated. Consumer prices in Asia's fourth-largest economy rose 2.9% in September. That keeps rates at or above the Bank of Korea's 2% target for 13 consecutive months.
ING stated that the end of the tightening cycle is unlikely. Inflation stays above target, and economic growth remains resilient. This growth has been largely supported by semiconductor exports. Demand for chips powering the artificial intelligence boom drives these sales.
September exports surged 83.7% year on year. It was a record increase. Semiconductor shipments spiked more than 262% compared to the same period last year. The International Monetary Fund projects South Korea's economic growth at 3.3% for the full year of 2026. Actual GDP growth for the first and second quarters came in at 3.8% and 3.7%, respectively. Both figures exceeded expectations.