Bank of Korea holds rates after President Lee calls for boosting housing supply

South Korea's central bank expectedly kept its policy rate steady at 3% on Thursday, after two straight hikes, with analysts pointing that it does not signal a change in policy stance as inflation stays elevated.

Economists polled by Reuters had forecast the Bank of Korea to hold rates and the decision comes after President Lee Jae Myung reportedly called for an "all out effort" to boost housing supply.

Inflation in Asia's fourth-largest economy came in at 2.9% in September, staying at or above the BOK's 2% target for 13 months.

The Kospi was trading 1.23% lower, while the won strengthened marginally against the dollar to trade at 1,326.1.

Analysts from Dutch bank ING said that the pause was unlikely to mark the end of the tightening cycle, as inflation remains above target and economic growth was relatively resilient.

Growth for South Korea has been largely supported by exports of semiconductors as demand for chips to power the AI boom continues.

Exports for September skyrocketed at a record 83.7% year on year, with semiconductors spiking over 262% compared to the same period last year.

The IMF has projected the country's growth at 3.3% for the whole of 2026. GDP growth for the country came in at 3.8% and 3.7% for the first and second quarters respectively, both times beating expectations.

Source: CNBC