South Korea’s central bank kept interest rates unchanged last week, but the real story is what happened behind closed doors. Two of the Bank of Korea’s seven board members voted to raise the policy rate by 25 basis points, arguing that economic growth had exceeded the country’s potential and that inflationary pressures weren’t going away.
The 5-2 split on May 28 is the clearest signal yet that the BOK’s next move could be up, not down.
What the minutes actually say
The BOK held its base rate at 2.50% for the eighth consecutive meeting. A Reuters poll ahead of the decision found that 30 of 32 economists predicted a hold.
The surprise was the dissent. Two board members broke ranks to advocate for a rate hike, citing economic performance that had outpaced the country’s potential growth rate alongside sticky inflation.
