Bank of Korea raises benchmark rate to 2.75%

South Korea's central bank raised its benchmark interest rate on Thursday, July 16, 2026, marking its first increase since January 2023. The Bank of Korea's monetary policy board voted to lift the seven-day repurchase rate by 25 basis points to 2.75 percent, a move widely anticipated by economists.

The decision was driven by persistent inflation and a weakening national currency. Headline inflation reached 3.2 percent in June, its highest level in three years. Meanwhile, the South Korean won has depreciated significantly against the U.S. dollar this year, hitting a 17-year low of 1,561.5 per dollar on June 5. Officials have also expressed concern that large performance bonuses in the technology sector could fuel broader wage gains, adding further pressure on prices.

Governor Shin Hyun Song, who took office in April, had previously signaled a move toward higher rates. The hike aligns South Korea with other central banks globally, including the European Central Bank and the Bank of Japan, which have also tightened monetary policy in response to inflationary pressures.

Despite these challenges, the South Korean economy has shown robust growth, expanding 1.8 percent in the first...