Latest bank decision: At its meeting on 16 April, the Bank of Canada kept its target for the overnight rate...
BOK Base Rate in Korea
South Korea's central bank policy rate declined from 2013 to 2020 in order to stimulate growth and inflation. Post-pandemic, there was a gradual shift towards rate normalization, balancing economic recovery with emerging inflationary pressures.
The BOK Base Rate ended 2022 at 3.25%, above the 1.00% end-2021 value and also above the reading of 2.50% a decade earlier. For reference, the average policy rate in the Asia-Pacific region was 3.70% at the end of 2022. For more interest rate information, visit our dedicated page.
Korea Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Korea from 2015 to 2024.
Source: Macrobond.
Korea Interest Rate Data
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| BOK Base Rate (%, eop) | 0.50 | 1.00 | 3.25 | 3.50 | 3.00 |
| 3-Month KORIBOR (%, eop) | 0.81 | 1.41 | 4.04 | 3.88 | 3.36 |
| 10-Year Bond Yield (%, eop) | 1.71 | 2.25 | 3.73 | 3.18 | 2.86 |
Central Bank decreases rates in February
Latest bank decision: At its meeting on 25 February, the Central Bank decided to lower the base rate by 25 basis points, from 3.00% to 2.75%.
Monetary policy drivers: The key domestic factors influencing the Central Bank's decision were moderate inflation—which has been below or close to the Central Bank’s 2.0% target in recent months—an ongoing slowdown in household debt, and a projected significant slowdown in economic growth going forward.
Monetary easing on the cards ahead: The Central Bank hinted that it would cut rates further going forward, without specifying when or by how much. Our Consensus is for 25 to 75 basis points more cuts by the end of 2025, in light of our forecasts for mild price pressures and economic growth.
Panelist insight: On the outlook, DBS’ Ma Tieying said: “We maintain our forecast for the BOK to reduce rates by another 25bps in 2Q, bringing the base rate to 2.50%. CPI inflation is expected to remain around 2% YoY through 1H, providing further room for the BOK to adjust rates toward a neutral level. However, concerns over household debt and KRW volatility suggest that the BOK is likely to proceed cautiously with the pace and scale of rate cuts to mitigate potential side effects.” ING’s Min Joo Kang said: “We expect the BoK to ease three more times in 2025, once per quarter, as a lower-than-neutral rate is needed to support growth. This is 25bp lower than the BoK's current assumption.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Korean interest rate projections for the next ten years from a panel of 18 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Korean interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Korean interest rate projections.
Want to get access to the full dataset of Korean interest rate forecasts? Send an email to info@focus-economics.com.
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