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Korea Interest Rate

Korea Interest Rate

BOK Base Rate in Korea

South Korea's central bank policy rate declined from 2013 to 2020 in order to stimulate growth and inflation. Post-pandemic, there was a gradual shift towards rate normalization, balancing economic recovery with emerging inflationary pressures.

The BOK Base Rate ended 2022 at 3.25%, above the 1.00% end-2021 value and also above the reading of 2.50% a decade earlier. For reference, the average policy rate in the Asia-Pacific region was 3.70% at the end of 2022. For more interest rate information, visit our dedicated page.

Korea Interest Rate Chart

Note: This chart displays Policy Interest Rate (%) for Korea from 2014 to 2023.
Source: Bank of Korea.

Korea Interest Rate Data

2018 2019 2020 2021 2022
BOK Base Rate (%, eop) 1.75 1.25 0.50 1.00 3.25
3-Month KORIBOR (%, eop) 1.90 1.51 0.81 1.41 4.04
10-Year Bond Yield (%, eop) 1.95 1.68 1.71 2.25 3.73

BOK stands pat at January meeting

At its meeting on 11 January, the Bank of Korea (BOK) kept the base rate unchanged at 3.50%. The decision was unanimous and matched market expectations.

Inflation has slowed in recent months, but remains above the BOK’s 2.0% medium-run target, pushing the central bank to stand pat and postpone lowering rates. In justifying its decision, the BOK also pointed towards its inflation forecasts—largely unchanged from those last made in November—which suggest inflation will average above target in 2024.

In its forward guidance, the BOK said it would no longer consider hiking rates, with the board unanimously in favor of holding rates stable over the next three months. In a post-meeting press conference, BOK Governor Rhee Chang-young stated that he did not anticipate rate cuts for at least the next six months. In accord with this, our panel expects the BOK to begin cutting its policy rate in Q3 2024, slightly later then the Q2 2024 that they had projected after the BOK’s last meeting in November. The date of the next BOK meeting is 22 February.

Analysts at Nomura commented on the outlook: “We maintain our forecast that the first cut will be 25bp and will take place in July, with three further 25bp cuts taking the policy rate to 2.5% by end-2024 from 3.5% currently.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Korean interest rate projections for the next ten years from a panel of 20 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Korean interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Korean interest rate projections.

Want to get access to the full dataset of Korean interest rate forecasts? Send an email to info@focus-economics.com.

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