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Investing.com -- The Bank of Korea (BoK) kept its policy rate unchanged at 2.50% on Thursday, a decision that was anticipated by most analysts but is not expected to signal the end of its current easing cycle.
The rate hold was correctly predicted by 12 out of 18 analysts surveyed by LSEG. Despite a weak economic start to 2025, South Korea’s GDP growth showed improvement in the second quarter, with high-frequency indicators suggesting continued resilience through the third quarter.
Official GDP figures for the third quarter are scheduled for release on Sunday.
The overall economic outlook remains soft, with several factors pointing toward slower growth ahead. These include an ongoing property downturn, weak export demand, and tighter fiscal policy measures.
Inflation pressures have moderated, with headline inflation easing to 2.1% year-over-year in September, which is close to the central bank’s 2% target. This controlled inflation environment provides room for potential rate cuts.
Concerns that lower interest rates might trigger another property boom appear unfounded, as house prices outside Seoul have remained largely flat, suggesting the market would not overheat with further monetary easing.
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