Central Bank leaves rates unchanged in November

Bank stands pat: At its meeting on 27 November, the Bank of Korea (BOK) decided to leave the base rate unchanged at 2.50%. The decision matched market expectations and marked the fourth successive hold after May’s 25 basis point cut.

Weak currency, financial instability and solid GDP growth underpin hold: The BOK’s decision to hold came on the back of concerns about the broader economic outlook, including a volatile exchange rate and an overheated housing market, which is threatening financial stability. Additionally, as economic momentum remained strong in Q3, an additional rate cut was deemed unnecessary.

Most panelists expect a Q1 2026 cut, but fewer than before: Three of the seven board members indicated they were open to a further rate cut over the next three months—one fewer than at the previous meeting. While the vast majority of our panelists still expect a 25 basis points cut in Q1 2026, the share anticipating easing has declined over the past month as the BOK has adopted a more hawkish tone: In a subsequent conference, Governor Rhee noted that the policy rate is now near the neutral rate, and in its forward guidance, the BOK removed the phrase “maintain rate cut stance” and added “leaving room for potential rate cuts”.

Panelist insight: ING’s Min Joo Kang said: “Strict government controls on mortgages and home buying are gradually slowing the housing market, but underlying demand remains strong. The recent consumer sentiment survey showed that expectations for housing prices dropped but remain elevated. Thus, the BoK will have to monitor the housing market trends. We anticipate that the housing market will stabilise, at least in the short term, as the government considers implementing stricter measures. Nevertheless, this is unlikely to provide sufficient confidence for the BoK to lower the policy rate.”

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