BOK Base Rate in Korea
South Korea's central bank policy rate declined from 2014 to 2020 in order to stimulate growth and inflation. Post-pandemic, there was a gradual shift towards higher interest rates in order to tame above-target price pressures, before another easing cycle began in 2024.
The bok base rate ended 2024 at 3.00%, compared to the end-2023 value of 3.50% and the figure a decade earlier of 2.00%. It averaged 1.86% over the last decade. For more interest rate information, visit our dedicated page.
Korea Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Korea from 2015 to 2024.
Source: Macrobond.
Korea Interest Rate Data
2020 | 2021 | 2022 | 2023 | 2024 | |
---|---|---|---|---|---|
BOK Base Rate (%, eop) | 0.50 | 1.00 | 3.25 | 3.50 | 3.00 |
3-Month KORIBOR (%, eop) | 0.81 | 1.41 | 4.04 | 3.88 | 3.36 |
10-Year Bond Yield (%, eop) | 1.71 | 2.25 | 3.73 | 3.18 | 2.86 |
Central Bank leaves rates unchanged in August
Central Bank holds as expected: At its meeting on 28 August, the Bank of Korea (BOK) decided to leave the base rate unchanged at 2.50%. The decision matched market expectations and marked the second successive pause after May’s 25 basis points interest rate cut.
Overvalued housing market drives the hold: Macroprudential concerns were the main driver of the hold: Signs of a possible house-price bubble in Seoul and surrounding areas continued to alarm policymakers despite recent laws to improve household debt management. Also influencing the decision to hold, the Bank marginally upgraded its 2025 economic growth forecast to 0.9% due to the government’s recent fiscal stimulus and the U.S. cutting planned tariffs on South Korean merchandise exports to 15% from 25%. These factors outweighed the fact that inflation remained around the Central Bank’s 2.0% target in July, and the fact that it should remain under control in the coming months due to soft demand-side pressures and declining oil prices.
BOK likely to ease by the end of 2025: Five out of six board members said they were open to a further cut in the next three months. Accordingly, all of our panelists expect at least a 25 basis points cut in Q4 amid higher trade frictions and still-frail economic growth. That said, the pace and scale of future rate cuts will likely depend on incoming economic data and the need to balance economic growth with financial stability and inflation risks. The Bank will reconvene on 23 October.
Panelist insight: Commenting on the outlook, ING’s Min Joo Kang said: “Inflation below 2% and a cautious growth outlook should support further easing measures. We continue to expect a 25 bp cut in October, followed by another in the third quarter of 2026. The timing of rate cuts in 2026 could move to the first half if the Fed eases faster or financial stability improves more than expected.”
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 18 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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