By Cynthia Kim and Jihoon Lee
SEOUL, Jan 15 (Reuters) – South Korea’s central bank on Thursday kept its benchmark interest rate unchanged, prioritizing financial stability in its first policy meeting of the year as the won hovered around 16-year lows.
The Bank of Korea’s monetary policy board voted to keep the benchmark interest rate unchanged at 2.50%, as expected by all 34 economists polled by Reuters.
Governor Rhee Chang-yong has recently signaled a prolonged pause in the current easing cycle after delivering 100 basis points of cumulative cuts since October 2024 amid geopolitical uncertainties and persistent fund outflow risks.
Rhee will hold a press conference at 0210 GMT, which will be livestreamed via YouTube.
“Bank of Korea Governor Rhee is likely to express his concerns on external financial instability while likely strongly ruling out a rate hike in the first half,” Citigroup analyst Kim Jin-wook said.
“He may stress Korean FX authorities are ready to implement decisive policy measures for FX stabilization if necessary, as seen in late December 2025, while gradually re-balancing structural capital flows.”
Policymakers so far have failed to stabilize the faltering won, one of Asia’s worst performing currencies in the second half of last year, as appetite for U.S. equities among domestic retail investors remained strong.
Analysts have pushed back the next predicted cut to the first quarter of 2027 from the first quarter of this year, as they expect authorities’ efforts to steady the won to continue amid unfavorable external conditions.
They expect headline inflation to average 1.9% this year, slightly below the central bank’s target of 2%.
(Reporting by Cynthia KimEditing by Shri Navaratnam)
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