The Bank of Korea kept its policy rate unchanged at 3.00%, pausing a tightening cycle that included rate hikes in July and August. The decision matched the expectations of all 34 analysts surveyed by Reuters.
The central bank's seven-member monetary policy board voted to hold the seven-day repurchase rate at 3.00%. The pause follows quarter-point hikes in July and August, the bank's first consecutive increases in more than three years, and Governor Shin Hyun Song said afterwards that a gradual pace of tightening was preferred.
NOVEMBER HIKE STAYS IN FOCUS
The median forecast in the Reuters survey sees a hike to 3.25% in November, in line with the central bank's dot plot. With the hold fully priced, attention shifted to Shin's news conference at 02:10 GMT for guidance on whether November remains live.
The decision to pause allows the Bank of Korea to monitor how the tightening so far is being transmitted to the real economy and the banking system.
INFLATION REMAINS ABOVE THE 2% TARGET
Headline consumer inflation slowed to 2.9% in September from 3.1% in August, but it remains above the central bank's 2% target.
Shin has said policy will remain restrictive until inflation returns to target, and he reiterated the point at an International Monetary Fund event on 13 October. Energy prices are a key upside risk to inflation for South Korea as a major oil importer.
CHIP EXPORTS ANCHOR THE GROWTH STORY
Exports for the January-to-September period topped $800 billion for the first time, driven by global spending on artificial intelligence.
Chipmakers remain at the centre of South Korea's growth story, given record exports driven by artificial intelligence. Exports for the January-to-September period topped $800 billion for the first time, supported by global demand for AI.
Related: South Korea's Bank of Korea hikes base rate 25 bp to 3.00% in back-to-back increase