Bank of Korea raises rates by 25 bps, ending 3.5-year hold to combat inflation

The first tightening in 42 months signals a decisive policy pivot as Seoul confronts persistent price pressures, aligning with broader Asia-Pacific central bank tightening cycles.

By Handelsavisen Newsroom · Automated 2026-07-16 13:24 UTC · 1 min read Last updated: 2026-07-16 18:22 UTC

The Bank of Korea (BOK) has raised its benchmark interest rate by 25 basis points, marking the first increase in three and a half years.

The move, announced Thursday, represents a decisive shift in monetary policy as policymakers confront mounting inflationary pressures that have persisted despite the prolonged hold.

35%, marking its third consecutive increase in a similar campaign against persistent inflation.

This action ends a long period of accommodative stance, signaling that the central bank now prioritizes price stability over growth support.

The rate hike was widely anticipated by market participants, who had already priced in a tightening cycle as inflation data remained sticky.

The decision aligns with a broader regional trend of central banks tightening policy to anchor inflation expectations.

The Reserve Bank of Australia, for instance, recently raised its benchmark rate to 4.35%, marking its third consecutive increase in a similar campaign against persistent inflation.