Bank of Korea Hikes Base Rate to 3% for Second Straight Month, Boosts Growth Outlook to 3.3% This Year

The Bank of Korea raised its growth outlook for this year to 3.3% and next year to 2.9%, driven by a booming semiconductor cycle and stronger domestic demand. It kept the inflation forecast at 2.7% for this year and 2.3% for next year. In addition, the Bank of Korea lifted the base rate from 2.75% to 3.00%, marking a second consecutive rate hike as part of a preemptive response to rising demand-side pressures and financial imbalances. The upgrade to growth was supported by stronger-than-expected exports, notably semiconductors, alongside rising household credit and real estate activity. Officials noted that quarterly momentum remains supportive enough to avoid negative growth, reinforcing a cautious tightening stance. Such back-to-back rate increases are a relatively rare policy path for the BoK, underscoring a measured response to a rapidly improving economy.