Bank of Korea Raises Rate to 3.00% to Curb Inflation

The Bank of Korea raised its benchmark interest rate by 25 basis points to 3.00 percent on Thursday, August 27, 2026, delivering a second consecutive increase as the central bank seeks to contain persistent inflation and financial stability risks amid a robust economic expansion. The decision, made by the seven-member monetary policy board, was widely anticipated by economists and markets.

The rate hike, which brings the seven-day repurchase rate to its highest level since February 2025, reflects the BOK's commitment to bringing inflation back to its 2 percent target. South Korea's consumer price inflation has remained elevated, driven by factors including high energy and food costs. The central bank left its inflation forecast for the year unchanged at 2.7 percent. However, the BOK significantly revised up its growth estimate for 2026 to 3.3 percent from the 2.6 percent projected in July, citing stronger-than-expected economic performance fueled by an unprecedented semiconductor boom tied to global artificial intelligence demand.

The decision marks a return to consecutive rate increases, a pattern last seen in early 2023 when the BOK concluded a run of seven straight hikes....