What did BOK Gov. Shin Hyun-song say about South Korea’s future interest-rate environment?

Shin said the central bank would shape policy for a future environment of higher economic growth and interest rates. He agreed that returning to the era of ultra-low rates would be difficult.

Why did the Bank of Korea hold its benchmark rate at 3 percent while maintaining a hawkish stance?

The BOK characterized the hold as a pause in its tightening cycle, not a departure from its hawkish position. It pointed to inflationary pressure from higher oil prices and renewed Middle East uncertainty, alongside a stronger-than-expected economic recovery.

What is driving the Bank of Korea’s stronger growth outlook for 2026 and 2027?

Shin attributed the prospect of growth above 3 percent in both years to strong exports related to artificial intelligence. The BOK had raised its 2026 forecast to 3.3 percent from 2.6 percent in August and was expected to consider another upward revision in November.

BOK chief signals hawkish stance amid outlook for higher growth, rates

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Summary

Bank of Korea Gov. Shin Hyun-song said Friday the central bank would prepare for an environment of higher growth and interest rates, signaling a continued hawkish stance. Speaking during a parliamentary audit at the National Assembly, he said a return to ultra-low rates would be difficult. The BOK held its benchmark rate at 3 percent Thursday, describing the decision as a pause in tightening. Shin said the economy could grow by more than 3 percent this year and next, supported by AI-related exports.

Key Facts

The BOK raised its benchmark rate to 3 percent in July and August, the first consecutive increases since January 2023.
The rate had been gradually reduced from 3.5 percent to 2.5 percent over the preceding 3 1/2 years before the latest increases.
The central bank cited rising oil prices, renewed uncertainty in the Middle East and a stronger-than-expected recovery as reasons for inflationary pressure.
The OECD revised its 2026 growth forecast for Korea to 3.7 percent.
The BOK raised its 2026 growth forecast to 3.3 percent from 2.6 percent in August and was expected to revise it upward again at its November meeting.

By Yonhap

Published Oct 23, 2026 5:06 pm KST

Bank of Korea (BOK) Gov. Shin Hyun-song, right, speaks during a parliamentary audit at the National Assembly in Seoul, Friday. Yonhap

Bank of Korea (BOK) Gov. Shin Hyun-song said Friday the central bank will adjust its monetary policy to a future environment of higher economic growth and interest rates, signaling it will maintain a hawkish stance for some time.

In response to a question from Rep. Kim Tae-nyeon of the ruling Democratic Party during a parliamentary audit at the National Assembly, Shin agreed with the assessment that a return to the era of ultra-low interest rates would be difficult.

"We will implement policies effectively in preparation for the prospect of a future environment characterized by high growth and high interest rates," he said.

The central bank has adopted a more hawkish stance in recent months amid rising inflation and solid economic growth.

It raised the benchmark interest rate to 3 percent in July and August, marking the first back-to-back rate hikes since January 2023. The January 2023 hike was the seventh consecutive increase in a tightening cycle that began in April 2022.

Over the 3 1/2-year period, the rate was gradually lowered to 2.5 percent from 3.5 percent before the latest round of hikes.

At its latest rate-setting meeting Thursday, the BOK held the rate steady but emphasized that the decision represented a pause in its tightening cycle rather than a shift away from its hawkish stance. It cited inflationary pressures from rising oil prices, renewed uncertainty in the Middle East and a stronger-than-expected economic recovery.

Shin also said the Korean economy is likely to grow by more than 3 percent this year and next year, driven by strong exports related to artificial intelligence (AI).

"I cannot say the exact numbers (for this year's growth forecast)," he said, noting that the Organization for Economic Cooperation and Development (OECD) had revised its 2026 growth forecast for Korea to 3.7 percent.

The BOK raised its 2026 growth forecast to 3.3 percent from 2.6 percent in August and is expected to revise it upward again at its next meeting in November.

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