By Veronica Dudei Maia Khongwir
BENGALURU, Jan 13 (Reuters) – South Korea’s central bank will keep its key interest rate unchanged at 2.50% on Thursday, as the won’s fall has limited room for easing, according to economists in a Reuters poll, who have pushed expectations for the next cut to early next year.
The Korean won has weakened nearly 2% during the first two weeks of the year, increasing the risk of higher consumer prices and stoking inflation concerns, an issue flagged by the Bank of Korea (BOK) at its November meeting.
Asia’s fourth-largest economy recorded inflation of 2.1% in 2025, slightly lower than 2.3% in 2024 but still above the BOK’s 2% target.
The central bank has also signalled it may be nearing the end of its current easing cycle, revising its guidance from “maintain its rate cut stance” to “the Board will decide whether and when to implement any further Base Rate cuts,” strengthening the case for a longer pause.
All 34 economists polled from January 6 to 12 forecast the BOK would keep its base rate unchanged at 2.50% on January 15.
“Given the volatility in the FX market, it is too soon for the BOK to cut rates right now,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.
“Despite the government’s efforts in controlling supply, expectations for house prices, particularly for Seoul apartment prices, are still elevated at the moment. So the focus for the BOK is now turned to having a stable currency and also looking at instability stemming from the overheating apartment prices.”
Apartment prices in Seoul increased by 0.18% in the week ending January 5, according to data released by the Korea Real Estate Board on Thursday. Prices climbed 8.7% over the course of 2025, underscoring challenges for the BOK as it considers whether to resume easing.
The survey also showed no change to rates through 2026, marking a shift from the November 2025 poll, when more than 60% of respondents expected at least one additional rate cut in the first quarter of this year.
In the latest poll, only 22%, seven of 32 respondents, expected another cut this quarter.
South Korea’s economy was forecast to expand 2.0% this year, slightly above the BOK’s forecast of 1.8%, and by 1.9% in both 2027 and 2028.
Inflation was expected to average 1.9% this year, slightly below the central bank’s forecast of 2.1%.
(Other stories from the Reuters global economic poll)
(Reporting by Veronica Dudeimaia Khongwir ; Polling by Devayani Sathyan in BENGALURU and Jihoon Lee in SEOUL; Editing by Sharon Singleton)
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