South Korea is holding the line – but it is not relaxing. The Bank of Korea (BOK) has paused its rate cut cycle, yet forward guidance remains firmly on the dovish side. Domestic demand is still soft, capital outflows haven’t let up and financial risks continue to creep. At the same time, regulators are leaning harder into structural reforms, from digital finance to market access. It is still a balancing act - but now with a few high-wire moves in play.
Monetary Policy
The BOK held at 2.5% this month - no surprises there. But read between the lines and the mood is shifting. Four of seven board members now favour a rate cut within the next quarter. They flagged weak domestic activity, housing market fragility and incoming US tariff risks. There is still no rush to frontload, but the bias is clear and that is that more easing is coming, just not all at once.
Flashback to: [June 2025] for the last rate cut and messaging shift.Flashback to: [May 2025] for “soft landing vs sugar high” framin...
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