BOK keeps base rate unchanged at 2.50% for seventh time

[The Financial News] The Bank of Korea (BOK) kept the base rate unchanged at 2.50% at this year’s second meeting of the Monetary Policy Board. This marks the sixth consecutive decision to hold the rate steady. The central bank appears to have taken into account that, although expectations for further rises in housing prices have eased, a sustained downward trend in prices is still uncertain, and the won–dollar exchange rate has remained in the 1,440–1,450 won range even after direct intervention by the foreign exchange authorities.
At its policy meeting on the 26th, the Monetary Policy Board of the Bank of Korea decided to keep the base rate at 2.50% per year. Since cutting the rate to 2.50% last May, this is the seventh consecutive meeting at which it has remained at the same level. As a result, the base rate will be locked in for another roughly two months until the next meeting in April, meaning it will have stayed at 2.50% for a full year.
In a survey conducted by The Financial News on the 22nd of this month of 10 financial experts from domestic securities firms, banks, and academia, all respondents predicted that the base rate would be kept unchanged. Cho Yong Gu, a research analyst at Shinyoung Securities, noted, “The BOK already made it official at the January Monetary Policy Board meeting that the rate-cut cycle has ended,” adding, “Given the upcoming local elections in June, overheating in the real estate market, and the weak won, there appears to be no room for further cuts.”
In fact, expectations of a rate cut within the financial sector, which had lingered until around the November Monetary Policy Board meeting last year, have long since disappeared. The turning point came when the won–dollar exchange rate surged to 1,480 won at the end of last year. The BOK and the Ministry of Finance and Economy, as part of the foreign exchange authorities, intervened directly by selling dollars, which pulled the upper end of the range down somewhat, but the 1,400-won threshold has still not been broken. As of the closing price on the 24th, the rate stood at 1,442.50 won.
There are some signs that the issue of rising home prices is easing. According to the BOK’s “Consumer Sentiment Survey for February,” the housing price outlook index fell from 124 in the previous month to 108 this month, a drop of 16 points, indicating that expectations themselves are receding. Data from the Korea Real Estate Board (KREB) also show that the rate of increase in Seoul apartment sale prices has slowed for three consecutive weeks since the first week of this month.
However, from the BOK’s perspective, a rate cut could inadvertently fuel another rise in housing prices, making it difficult to use the recent easing in price pressures as justification for lowering rates.
Seung-Won Kang, an NH Investment & Securities researcher, pointed out, “Since the November Monetary Policy Board meeting last year, there has been no change in financial stability risks,” and added, “If anything, concerns have grown because the exchange rate has not fully stabilized despite government intervention.”
On the same day, the BOK raised its economic growth forecast for this year from 1.8% to 2.0%. Many analysts believe that, thanks to strong semiconductor exports, achieving this figure will not be difficult. This gives the Monetary Policy Board yet another reason not to cut the base rate.
Meanwhile, the fervor for household lending appears to be gradually cooling. According to the BOK’s provisional data on household credit for the fourth quarter of 2025, released on the 20th, the outstanding balance of household credit stood at 1,978.8 trillion won at the end of December last year. This represents an increase of 14 trillion won over three months, but the pace of growth slowed compared with the previous quarter’s 14.8 trillion won rise. It is also nearly half the 25 trillion won increase recorded in the second quarter.
The BOK cited several factors behind this trend, including the additional designation of Areas Subject to Adjustment, Speculative Overheating Districts, and land transaction permit zones, as well as differentiated mortgage loan limits based on housing prices. Regarding unsecured credit loans, it assessed that a key factor was the June 27 Real Estate and Loan Regulation Measures, which capped loan limits at each borrower’s annual income.

taeil0808@fnnews.com Kim Tae-il Reporter