S.Korea central bank holds rates, adopts dot-plot path signalling extended pause

The Bank of Korea's seven-member monetary policy board voted to keep its benchmark interest rate (KROCRT=ECI) unchanged at 2.50%, as expected by all 34 economists polled by Reuters.

The central bank raised this year's growth forecast to 2.0% from 1.8% previously.

It also introduced the Federal Reserve's dot plot style chart on Thursday that shows where the policy interest rate would be in the next six months. Of the 21 dots, 16 were at 2.50%, meaning a predominant view for no change in the rate until at least August this year.

South Korea's policy-sensitive three-year treasury bond futures rose as much as 0.21 points to 105.49.

The BOK recently signalled a prolonged pause in its easing cycle that began in October 2024 as it navigates currency market volatility and risks from swelling household debt.

The central bank sees Asia's fourth-largest economy growing significantly faster this year than in 2025, helped by a chip boom led by Samsung Electronics and SK Hynix, it said in a report on Monday.

That is even as the economy navigates trade uncertainties amid unpredictable shifts in U.S. tariff policies, which could dampen export growth and destabilise key sectors such as automobiles and steel.

"While market yields are pricing hike possibilities in the next 12 months, we see the case would be likely only if inflation growth jumps above 2.5% with dollar-won (rate) above 1,550," Lee Seung-hoon, a Seoul-based analyst at Meritz Securities, said. Lee is among the majority expecting rates to stay unchanged this year.

On Wednesday, the benchmark KOSPI topped the 6,000-mark for the first time, extending its world-beating rally even after doubling in value in the past year.

Governor Rhee Chang-yong will hold a press conference at 0210 GMT, which will be livestreamed via YouTube.