The Bank of Korea (BOK) has increased its benchmark interest rate by 25 basis points to 2.75%, ending a prolonged period of monetary accommodation.
The decision, announced Thursday, represents the central bank's first tightening move in more than three years, signaling a decisive shift in its stance as policymakers confront mounting inflationary pressures.
This rate hike marks a significant departure from the previous policy regime, which had kept rates steady for three and a half years.
The move reflects growing concerns among BOK officials about persistent price pressures and the need to anchor inflation expectations.
By tightening policy, the central bank aims to prevent inflation from becoming entrenched while balancing the risks to economic growth.
The decision comes as global central banks navigate a complex macroeconomic environment, with many peers having already begun their tightening cycles.