The Bank of Korea (BOK) said on the 25th that it will decide whether and when to cut the base rate further by comprehensively considering uncertainty in the paths of prices and growth and their outlooks, as well as risks to financial stability.
The Bank of Korea (BOK) announced this through its report on the direction for operating currency and credit policy in 2026. The Bank of Korea (BOK) began cutting the base rate in Oct. last year and lowered it by a total of 1 percentage point (3.5→2.5%) over four rounds.
The Bank of Korea (BOK) said it expects the inflation rate to fluctuate near the 2% target level, but upward pressure could expand more than expected due to the strong won-dollar exchange rate and the recovery in domestic demand.
On growth, it said it appears likely to rise to the potential growth rate level, but there are significant related upside and downside risks, including the global trade environment, the semiconductor cycle, and the pace of domestic demand recovery. It added that from a financial stability perspective, there remains a need to stay alert to developments in Seoul metropolitan area dwellings prices and household debt risks, and the impact of increased exchange-rate volatility.
Regarding Korea's foreign exchange institutional sector, the Bank of Korea (BOK) said it will strengthen market monitoring and actively implement market-stabilization measures against excessive herd behavior. It added that it will continue to pursue measures to improve foreign investors' access by working with the government to address structural foreign exchange supply-demand imbalances, opening the FX market 24 hours, and overhauling regulations related to the use of the won offshore among nonresidents.
The Bank of Korea (BOK) also said of stablecoins that it will work to build a stablecoin governance structure that takes into account macroeconomic stability and strengthen monitoring of the virtual asset market as a whole.