SEOUL, May 28 (AJP) — As widely expected, the Bank of Korea (BOK) on Thursday kept its benchmark interest rate unchanged at 2.5 percent for a full year, deferring a possible rate move to its next meeting in July as it judged the chip boom strong enough to offset the fallout from months-long Gulf disruptions and support stronger-than-expected economic growth.
The first post-meeting briefing by new Governor Shin Hyun-song will be closely watched. The former BIS economist has long emphasized price stability and warned that a weak won could pose broader economic risks.
Price pressures have re-emerged as a dominant concern, amplified by prolonged maritime disruptions in the Middle East, a crucial trade artery handling nearly 70 percent of South Korea’s crude oil imports. Consumer prices rose 2.6 percent year-on-year in April, while producer prices jumped 6.9 percent, signaling a sharp return of energy-driven inflationary momentum.
Given the lagged impact of global oil benchmarks, higher input costs are expected to ripple through the domestic economy in the coming months, complicating the BOK’s inflation-targeting path.
During this session, BOK Deputy Governor Ryoo Sang-dai and monetary board member Jang Yong-seong cast dissenting votes, calling for a rate hike to 2.75 percent.
This marks the first time in 18 months that two or more dissenting votes were registered since the central bank cut the key rate by 25 basis points from 3.25 percent to 3.0 percent in November 2024, a meeting where both Ryoo and Jang had also notably broken consensus by voting to freeze the rate.
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