FX.co ★ South Korea Holds Key Rate Steady

The Bank of Korea (BoK) left its policy rate unchanged at 2.5% at its May 2026 meeting, as widely expected, marking an eighth consecutive pause even as the bank remains in an easing cycle. Policymakers adopted a cautious tone, weighing renewed inflationary pressures from higher oil prices against persistent uncertainty surrounding the broader economic outlook.

The meeting was the first to be chaired by the new governor, Shin Hyun-song, who took office last month. Alongside the rate decision, the BoK upgraded its 2026 growth forecast to 2.6% from 2.0%, citing a stronger export outlook underpinned by robust demand in the semiconductor sector. The central bank also projected GDP growth of 2.1% for 2027 and forecast consumer inflation at 2.7% this year and 2.3% in 2027.