The Bank of Korea raised its benchmark interest rate by 0.25 percentage points to 2.75 percent on July 16, marking the first hike in three and a half years to tackle high inflation.
The Bank of Korea's Monetary Policy Board raised the benchmark rate from 2.5 percent to 2.75 percent during its meeting on July 16. It was the first increase since January 2023 and came amid persistent inflationary pressures linked to Middle East tensions.
Consumer prices rose 3.2 percent in June from a year earlier, the fastest pace since December 2023. The figure stayed above 3 percent for a second straight month, driven largely by a 24.7 percent surge in fuel prices.
Exports remained strong. Shipments reached a record $102.25 billion in June, surpassing the $100 billion mark for the first time, while semiconductor exports nearly tripled to $44.82 billion.
Governor Shin Hyun-song told reporters that inflation is expected to remain significantly above target for some time and signaled that further rate hikes could follow. The bank's next policy meeting is scheduled for August 27.
