BOK chief says policy direction is clear as bank raises growth forecast to 2.6%

Bank of Korea Gov. Shin Hyun-song speaks to reporters in a press conference held in central Seoul on May 28. The central bank kept the rate steady at 2.5 percent, while signaling monetary tightening. [BOK]

Korea's central bank sharply raised its economic growth forecast for this year on Thursday, in a move that aligns with its signal of further interest rate hikes ahead. Its monetary policy board, however, kept the benchmark rate unchanged at 2.5 percent during a meeting as it waits for clearer signs of how uncertainty from the war in the Middle East and its spillover effects will filter through the economy.

The Bank of Korea (BOK) lifted the country's growth outlook to 2.6 percent from the 2 percent projected in February on robust semiconductor exports despite uncertainty stemming from the war in the Middle East. It was the sharpest upward revision since May 2021.

In the first monetary policy board meeting since the inauguration of new BOK Gov. Shin Hyun-song last month, markets focused closely on the future direction of monetary policy and the governor’s tone.

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