South Korea central bank to raise rates on July 16, first hike in three years

The Bank of Korea is scheduled to increase its benchmark seven‑day repurchase rate by 25 basis points on July 16, taking it from 2.50% to 2.75%. This marks the first rate rise since January 2023. Inflation in South Korea remains above the BOK’s 2% target, with consumer‑price growth at 3.1% in May and 3.2% in June, driven by higher global oil prices linked to the U.S.–Israel‑Iran conflict and a weakening Korean won.

Governor Shin Hyun‑song said tightening is necessary as inflation is expected to stay above target through 2027. A Reuters poll of economists predicts the July hike and a possible additional increase by year‑end, with many forecasters seeing the policy rate reaching around 3.0% before the end of 2026. The central bank also revised its 2026 GDP growth forecast to 2.6%.

The rate move is expected to make KRW‑denominated assets more attractive, lift Korean bond yields and could affect export‑oriented equities if a stronger won erodes competitiveness. Analysts note that the decision runs counter to a global trend of easing monetary policy.