The Bank of Korea (BOK) raised its benchmark interest rate by 25 basis points to 1.75% on July 16, 2026, marking the first rate hike in three and a half years. The decision was driven by rising inflationary pressures and a recovering economy.
BOK Governor Lee Ju-yeol stated that the move was necessary to preemptively curb inflation expectations, as consumer prices have been rising faster than the bank's 2% target. The rate hike was widely expected by market analysts.
The central bank also revised its 2026 inflation forecast upward to 2.3%, citing higher global commodity prices and domestic demand recovery. The BOK maintained its growth forecast for the year at 3.0%.
