Bank of Korea raises policy rate to 2.75%, sparking KOSPI sell‑off

The Bank of Korea increased its base rate by a quarter point on June 16, moving the policy rate from 2.50% to 2.75% – the first hike since January 2023. Governor Shin Hyun‑song said the move targets inflation, rising housing prices and a weakening won, not stock‑market performance. South Korea’s consumer‑price index rose to 3.2% year‑over‑year in June, while oil price spikes and a depreciating won added import‑price pressure.

The announcement triggered a sharp market reaction: the KOSPI index fell more than 6% intraday, activating the exchange’s circuit‑breaker mechanism, and heavyweight chips stocks Samsung Electronics and SK Hynix dropped 8% and 11% respectively. The bank also noted strong demand for AI‑focused semiconductors, which continues to support export‑driven growth, and kept its 2026 GDP forecast at 2.6%.