The Bank of Korea unanimously kept its base rate unchanged at 2.5% for a fifth consecutive meeting in its first policy decision of 2026, in line with market expectations. The move reinforced signals that the current easing cycle has likely reached an end following a cumulative 100bps since October 2024, as policymakers shifted their focus toward financial stability with the won hovering near 16-year lows. In its latest statement, the BoK removed language on considering further cuts, underscoring caution amid geopolitical risks, capital outflow pressures, and uncertainty over U.S. Federal Reserve policy. Concerns over high household debt levels and exchange-rate volatility also weighed on the latest decision. On the macro outlook, policymakers left inflation forecasts unchanged, projecting headline CPI at 2.1% and core at 2.0% this year, both near target. It also maintained its 2026 GDP growth forecast at 1.8%, pointing to a steady but modest recovery.
