BOK Expected to Hold Rates at 2.50% as Housing and Currency Pressures Persist

The Bank of Korea (BOK) is widely expected to keep its benchmark interest rate unchanged at 2.50% this Thursday, according to a recent Reuters survey. Most economists now anticipate that the next rate cut will be postponed until early 2026 due to persistent weakness in the Korean won, elevated home prices, and ongoing concerns about an overheated property market.

In the poll conducted from November 18–24, nearly 90% of economists—32 out of 36—forecast that the central bank will extend its current rate pause, which has been in place since May. Only four respondents expect a 25-basis-point reduction. Analysts say the combination of a volatile currency and rising real estate prices has kept policymakers cautious, delaying the timing of future monetary easing.

South Korea’s economy has shown signs of renewed momentum, adding to the case for a steady policy stance. Third-quarter GDP grew 1.2%, the strongest expansion in more than a year, while October inflation climbed to 2.4%, surpassing the BOK’s 2% target. Although the central bank has already delivered 100 basis points of cuts since October 2024, economists argue it needs more time to assess the full economic impact.

Many analysts expect at least one additional cut by the end of March 2026. Out of 28 economists who offered longer-term projections, 17 predict rates will fall to either 2.25% or 2.00% in the first quarter, while 11 expect no change. Despite near-term caution, experts note that a negative output gap, modest growth, and potential Federal Reserve easing in 2026 could reopen the path for further rate reductions.

The BOK projects South Korea’s economy will expand just 0.9% this year, marking the slowest pace since the pandemic. With growth still below potential and inflation remaining manageable, economists believe the direction of monetary policy ultimately points downward—though the timing now appears further out than previously expected.