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    Bank of Korea holds at 3% after two hikes, but lifts its growth outlook and keeps November in play

    A unanimous pause follows quarter-point increases in July and August, with the board saying inflation will stay above target for a considerable period.

    HedgeWeekly News Desk ·

    The Bank of Korea left its seven-day repo rate at 3.00% on Thursday, with all seven members of its Monetary Policy Board voting to hold. Every one of the 34 analysts in a Reuters poll had expected the pause, which follows quarter-point increases in July and August, the bank's first back-to-back hikes in more than three years.

    The board said it wanted time to gauge the effect of those two moves and would set the timing and pace of any further tightening by watching inflation, growth and financial stability. Governor Shin Hyun Song said afterwards that he favoured a gradual approach, repeating his line from an IMF event on October 13 that policy would stay restrictive until inflation returns to target.

    The statement itself leaned hawkish. The bank now expects growth this year and next to beat its August projections of 3.3% and 2.9% by a wide margin, driven by exports, investment and a strong semiconductor cycle; shipments in January to September topped $800 billion for the first time. Headline inflation eased to 2.9% in September from 3.1% in August, but the board expects 2027 consumer and core inflation to exceed its earlier 2.3% and 2.5% forecasts and said prices will run above the 2% target for a considerable period. Korean shares fell more than 1% in early trade and the won was little changed at 1,325.9 per dollar.

    Why it matters: Korea is one of the few major Asian economies still tightening, and the decision reads as a pause rather than a turn. The Reuters poll median sees a move to 3.25% at the November meeting, matching the bank's own dot plot, so the board's next growth and inflation update is the key test for won and short-dated Korean bond positioning. The bank flagged the Middle East and major economies' policies as sources of uncertainty, making oil, with Brent near $110 a barrel on Thursday, a live upside risk to its inflation path. Across the region, Bank of Japan Deputy Governor Ryozo Himino has also signalled readiness to raise rates, a backdrop allocators with Asian rates and currency exposure will be watching.

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