The Bank of Korea held its base rate at 2.50% at its Monetary Policy Board meeting on 27 November 2025, marking the fourth consecutive meeting at which policymakers have opted to keep the benchmark rate unchanged. The November decision is also the final meeting of the year for the BoK's rate-setting body, meaning the central bank closes out 2025 with its policy rate at the same level it occupied through the second half of the year — a stance that reflects an extended period of deliberate caution in the face of competing economic pressures.
The run of four successive holds follows a period in which the Bank of Korea cut its policy rate on two occasions during 2024 as inflation moved back toward the 2% target and concerns about the growth outlook intensified. The subsequent pause on further easing reflects the degree to which household debt dynamics and currency movements have complicated the path toward additional accommodation, even as the domestic economic trajectory has remained below the rates of growth recorded in prior years.
GDP OUTLOOK REVISED DOWN TO 1.8% FOR 2026
Alongside the rate decision, the Bank of Korea revised its GDP growth forecast for 2026 to 1.8%. The downward revision reflects a more cautious assessment of South Korea's economic trajectory as the country contends with subdued global trade conditions, uneven domestic demand, and persistent uncertainty in the external environment. The 1.8% projection places the growth outlook at a level that maintains the case for continued monetary policy support, but the board has thus far opted not to translate that support into further rate reductions while other considerations remain elevated.
South Korea's export-dependent economy is sensitive to external demand conditions in its principal trading partners and in the technology cycle, given the dominant role of semiconductor exports in the country's trade balance. Any deterioration in global chip demand or in the broader trade environment would apply further downward pressure on the growth outlook and could shift the balance of considerations within the Monetary Policy Board toward earlier or deeper easing than is currently reflected in the 2026 forecast.
HOUSING AND CURRENCY CONCERNS WEIGH ON DECISION
The Bank of Korea has consistently flagged two sets of concerns that have constrained the pace of rate reductions since the initial cuts of 2024. The first is housing-market stability: a reduction in the policy rate risks stimulating additional mortgage borrowing and adding further pressure to property prices, particularly in Seoul and other major metropolitan areas where affordability has been a persistent and politically sensitive issue. The BoK has been careful not to provide a monetary-policy stimulus that could re-ignite the household-credit expansion it has been working to moderate.
The second consideration is the Korean won's exchange rate. A more accommodative monetary stance from the BoK, at a time when several major central banks have been cautious about the pace of their own easing cycles, could put downward pressure on the won and add to imported inflation. Those twin constraints — housing and currency — have effectively set the floor for how far and how quickly the BoK has been willing to ease, and they remain operative as the central bank sets the conditions under which it will approach its first policy decisions of 2026. The next scheduled Monetary Policy Board meeting falls in the new year.