Bank of Korea Expected to Hold Rates at 2.50% on January 15, With Next Cut Pushed to 2027

South Korea’s central bank is expected to keep its benchmark interest rate unchanged at 2.50% at its policy meeting on Thursday, as the recent weakness of the Korean won has reduced the scope for further monetary easing. Economists have also pushed back expectations for the next rate cut to early next year.

The Korean won has weakened by nearly 2% over the first two weeks of the year, raising the risk of higher consumer prices and reviving inflation concerns. This issue was highlighted by the Bank of Korea at its November policy meeting.

Asia’s fourth-largest economy recorded inflation of 2.1% in 2025, down slightly from 2.3% in 2024, but still above the central bank’s 2% target.

The Bank of Korea has also signaled that it may be approaching the end of its current easing cycle. It revised its forward guidance from a commitment to “maintain its rate cut stance” to a more cautious message stating that the policy board would decide “whether and when” to implement any further base rate cuts. This shift has strengthened expectations for a prolonged pause in monetary easing.

All economists surveyed between January 6 and January 12 forecast that the central bank would leave its base rate unchanged at 2.50% on January 15.

“Given the volatility in the foreign exchange market, it is too early for the Bank of Korea to cut rates at this point,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.

“Despite the government’s efforts to manage supply, expectations for housing prices—particularly apartment prices in Seoul—remain elevated. As a result, the Bank of Korea’s focus has shifted toward maintaining currency stability and addressing risks stemming from overheating in the housing market.”

Apartment prices in Seoul rose by 0.18% in the week ending January 5, according to official data released on Thursday. Over the course of 2025, prices increased by 8.7%, highlighting the challenges facing the central bank as it weighs whether to resume easing.

The survey also showed no expectation for interest rate changes through 2026. This marks a notable shift from a poll conducted in November 2025, when more than 60% of respondents anticipated at least one additional rate cut in the first quarter of this year.

In the latest results, only 22% of respondents—seven out of 32—expected another rate cut during the current quarter.

South Korea’s economy is forecast to grow by 2.0% this year, slightly above the Bank of Korea’s own projection of 1.8%. Growth is expected to moderate to 1.9% in both 2027 and 2028. Inflation is projected to average 1.9% this year, marginally below the central bank’s forecast of 2.1%.