Macro● Neutral
BOK lifts policy rate to 2.75%, highest since 2023
South Korea's central bank raised its base rate to 2.75% in July, the highest since 2023, as inflation and household debt pressures mount. The won strengthened and bond yields rose on the decision.
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The Bank of Korea raised its base rate to 2.75% at the July 2026 meeting, a level not seen since late 2023. The decision follows two consecutive quarters of faster consumer price growth and a renewed build-up in household credit.
The rate increase widened Korea's yield premium over the U.S. to roughly 35 basis points, a gap that has historically attracted foreign bond inflows. The won firmed against the dollar in the hours after the announcement, though traders said the move was largely priced in after a string of hawkish central bank speeches in June.