Third straight on-hold decision underscores Seoul’s focus on stability ahead of Trump visit and key US trade talks

The Bank of Korea (BOK) kept its benchmark interest rate unchanged at 2.5% on Thursday, marking its third consecutive on-hold decision as the central bank seeks to contain housing risks and a weakening won. The decision follows a series of cuts between late 2024 and May this year that lowered the rate by a full percentage point. The Monetary Policy Board said growth is improving on strong exports while inflation remains near its 2% target, but warned that household debt and property market imbalances require close monitoring.

The won traded around 1,430 won per U.S. dollar following the announcement, while bond yields ticked higher and equity markets showed little movement, reflecting that investors had largely priced in the BOK’s decision to stay on hold. The decision came as Seoul and Washington reported “partial progress” in negotiations over South Korea’s $350 billion investment pledge ahead of U.S. President Donald Trump’s visit to Korea next week.

The Bank of Korea (BOK) kept its benchmark interest rate unchanged at 2.5% on Thursday, marking its third consecutive on-hold decision as the central bank seeks to contain housing risks and a weakening won. The decision follows a series of cuts between late 2024 and May this year that lowered the rate by a full percentage point. The Monetary Policy Board said growth is improving on strong exports while inflation remains near its 2% target, but warned that household debt and property market imbalances require close monitoring.

The won traded around 1,430 won per U.S. dollar following the announcement, while bond yields ticked higher and equity markets showed little movement, reflecting that investors had largely priced in the BOK’s decision to stay on hold. The decision came as Seoul and Washington reported “partial progress” in negotiations over South Korea’s $350 billion investment pledge ahead of U.S. President Donald Trump’s visit to Korea next week.

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