The Bank of Korea (BOK) on Thursday raised its benchmark seven-day repurchase rate by 25 basis points to 3 percent, delivering back-to-back hikes as inflation stayed above target and household debt kept rising.
The decision followed a 25-basis-point rate increase in July, which marked the BOK's first shift back toward monetary tightening since January 2023.
The move ran counter to a Korea Financial Investment Association survey of 100 fixed-income experts, in which 79 percent had predicted a hold.
The BOK said in a statement that while the domestic economy continued to grow faster than expected on strong exports and a recovery in domestic demand, inflation was expected to remain above its 2 percent target for a considerable time. The bank explained that pre-emptive action was needed to keep price pressures from spreading.
The consumer price index (CPI) rose 2.8 percent in July from a year earlier, falling below 3 percent for the first time in three months but staying above target for an 11th straight month since September 2025. The BOK said inflationary pressure was lingering on amid Middle East tensions.
Although the growth of household debts slowed last month, the total debts kept their upward trend for a fifth straight month.
Debt owed by households to deposit-taking banks totaled 1,194.8 trillion won (about 863 billion U.S. dollars) at the end of July, 5.4 trillion won more than a month earlier.
ROK raises key rate to 3 pct on inflation
