Bank of Korea keeps rates unchanged due to Seoul’s housing price, upgrades GDP and inflation forecasts.
Seoul Downtown City Skyline’s car on the highway and the bridge on the Han River in South Korea, South Korea.
Mongkol Chuewong | Moment | Getty Images
South Korea Central Bank kept its policy rate for 2.5% for the second flat meeting to further evaluate the housing prices in the capital after prices rose at the beginning of the year.
The movement was also in line with the expectations of the economists who participated in the survey by Reuters.
Korean bank in question This inflation was stable and economic growth showed a “modest development”, but warned that Seoul and its surrounding housing prices need to follow closer to the household debt.
Fok also increased the inflation forecast for 2025 from 1.9% to 2%, while the GDP growth forecast for the year was increased from 0.8% to 0.9%.
Bok expects the domestic demand for a “modest recovery” due to additional budget and improvement in consumer emotions.
“Exports have been likely to show positive movements for some time, but it should slowly slow down as the effects of US tariffs expand.” He said.
At the previous meeting, Bok also had rates by stating that Seoul needs to evaluate the impact of recent measures to cool the housing market.
The Central Bank’s decision came only days after South Korea President Lee Jae Myung met with US President Donald Trump at the beginning of this week, which led to a series of agreements between the two sides.
These include Multibillion Dollar Investment Contractings, Korean Air, a aviation purchases of $ 50 billion and shipbuilding and energy.
Within the scope of the July Trade Agreement, Seoul would invest $ 350 billion in the United States, including $ 150 billion for shipbuilding. Later, Seoul saw that the so -called “mutual” tariffs for export to the United States fell from 25% to 15%, including cars.
The country saw that net exports strengthened the growth of the April-June period to a better show than expected, and the GDP expanded by 0.6% in the quarter and 0.5% compared to a year ago.
Exports of goods and services account for about 44% of South Korean GDP in 2023. Latest figures from World BankThe US as the largest export market after the USA.
A note made by Bank of America analysts is expected to review the GDP growth projection with “alleviating trade headings” to 1.0% before 0.8% for 2025.
Analysts estimate that Bok will be open to reducing policy rates in the next three months and that a possible rate will be cut in October.
They also waited to keep the rates constant in the first half of 2026 at 2%.
However, inflation in South Korea supports a ratio deduction which is 2.1% in July and more than 2% of BOK.
