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2025-10-23 09:23:58
The Bank of Korea (BOK) held its policy rate steady at 2.5% on Thursday, as a resurgent housing market and a weakening won against the dollar reduced the scope for further easing. The BOK's seven-member Monetary Policy Committee voted to keep the benchmark rate unchanged at 2.50%. Thirty-three of 35 economists in a survey had expected this outcome. The median forecast currently calls for another rate cut in November, followed by a longer pause, as analysts anticipate policymakers will place greater emphasis on managing risks related to financial stability amid an overheated real estate market and uncertainty surrounding a trade agreement with the United States. Since October 2024, BOK policymakers have cut interest rates by a cumulative 100 basis points to support an economy reeling from the martial law controversy under former President Yoon Seok-yeol and trade uncertainty. However, Kim Jin Woo, an economist at Citigroup in Seoul, said the possibility of another surge in housing prices poses a problem for any further policy easing, especially given the downward pressure on the won against the dollar. Kim believes that the structural resilience of Seoul's apartment price growth, the risk of won depreciation posed by a $350 billion investment fund between South Korea and the United States, and a stronger-than-expected upcycle in memory chips make the current easing cycle difficult to sustain. He predicts the Bank of Korea's next interest rate cut will be in November 2026. With Seoul's apartment price-to-income ratio exceeding that of London and Sydney, the Lee Jae-myung administration announced measures to curb the real estate market this month for the third time in four months.
