Bank of Korea holds rate steady at 2.5% amid FX, housing instability

By Im Yoon-seo Posted : October 23, 2025, 10:16 Updated : October 28, 2025, 20:46
Bank of Korea Governor Rhee Chang-yong bangs the gavel during a Monetary Policy Board meeting at the central bank’s headquarters in Seoul on Oct. 23, 2025. Yonhap

SEOUL, October 23 (AJP) - The Bank of Korea kept its benchmark interest rate unchanged at 2.50 percent for October, maintaining its cautious stance amid continued volatility in foreign exchange and housing markets.

The Monetary Policy Board decided to hold the overnight call rate steady for the sixth consecutive month, citing limited room for monetary easing as it monitors the impact of the pending Korea–U.S. trade deal linked to a $350 billion investment package and the government’s latest efforts to curb speculative home buying.

 
Graphics by AJP Song Ji-yoon
 
 
The won has remained under pressure, with the dollar hovering near 1,430 won amid delays in the tariff negotiations between Seoul and Washington. Economists warn that a premature rate cut could further weaken the won and trigger capital outflows.

Bond prices rose Wednesday on expectations that the central bank may move toward a rate cut at its final policy meeting in November to support slowing growth. Korea’s economy expanded 0.7 percent in the second quarter, with the central bank set to release its third-quarter GDP estimate next Tuesday.
 
Im Yoon-seo

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