Bank of Korea sees neutral rate 1.8‑3.3% as AI‑driven growth lifts potential output

The Bank of Korea (BOK) indicated that the current policy rate of 2.75% falls within its estimated neutral‑rate range of 1.8% to 3.3%. It warned that the government’s target to raise potential growth to 3% will put upward pressure on the neutral rate. The BOK linked this pressure to strong performance in the semiconductor sector and expanding demand from artificial‑intelligence applications, which have boosted real GDP growth and real gross domestic income (GDI).

In the second quarter, real GDP rose 0.6% quarter‑on‑quarter, three times the BOK’s forecast, while real GDI surged 3.6% and 15.6% year‑on‑year – the largest annual increase since 1988. A higher neutral rate would translate into higher loan and deposit rates; a 0.25‑percentage‑point rise in mortgage rates could add about 1.8 trillion won in interest costs for borrowers each year. The BOK said future policy decisions will hinge on whether semiconductor‑driven growth proves temporary or becomes a sustained structural trend.