Bank of Korea Governor Shin Hyun-song used Thursday's press conference to make clear that the central bank's second consecutive rate hike was not business as usual, describing the back-to-back move as a departure from the usual practice that has sent a strong signal to the market.
The board raised the benchmark rate by a quarter point to 3 percent, with six members in favor and one dissenting, returning the policy rate to the 3 percent range for the first time since November 2024. Shin framed the decision as a deliberate act of preemption. By acting preemptively before price increases spread further, he said, the economy can avoid bearing greater costs later.
A Growth Forecast Revised Sharply Higher
The rate decision came alongside a striking upgrade to the bank's economic outlook. The BOK raised its 2026 growth forecast to 3.3 percent from 2.6 percent, its largest upward revision since May 2021, and lifted its 2027 forecast to 2.9 percent from 2.1 percent. Officials attributed the jump to strong semiconductor exports and a gradual recovery in domestic consumption, the same combination of forces that has left small businesses feeling squeezed even as headline growth accelerates.