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BOK begins tightening cycle as chip boom fuels growth, inflation concerns

The Bank of Korea (BOK) raised its benchmark interest rate Thursday, for the first time in three and a half years, as the semiconductor-driven economic recovery, stubborn inflation and lingering financial stability risks have combined to bolster the case for tighter monetary policy. The central bank lifted its policy rate by 25 basis points to 2.75 percent at its Monetary Policy Board meeting, marking its first rate increase since January 2023. BOK Gov. Shin Hyun-song also signaled that further rate increases remain on the table, saying the bank would “continue to respond through monetary policy until we are confident that inflation is converging sustainably toward our target.” A major factor behind Thursday’s move was the sharp improvement in Korea’s growth outlook, fueled by the global artificial intelligence (AI) boom and soaring demand for semiconductors. As economic momentum strengthens, the central bank has less need to support activity through ultra-accommodative policy and can instead focus on containing inflation. Shin said Korea, a key player in the global AI supply cha

1d agoBy Park Han-sol
BOK begins tightening cycle as chip boom fuels growth, inflation concerns

Korea to keep inflation below 3%, accelerate won internationalization

The government will focus on keeping consumer inflation below 3 percent in the second half of the year while accelerating the internationalization of the won, including measures to allow foreign investors to trade the Korean currency more freely offshore, Finance Minister Koo Yun-cheol said Wednesday. The finance ministry will also seek to enact a new national assets law to overhaul the management of more than 1,400 trillion won ($938 billion) in state-owned assets and broaden the framework to include emerging assets such as intellectual property and virtual assets. Koo outlined the plans to President Lee Jae Myung as part of a 10-point economic agenda for the second half of the year. The policy package focuses on stabilizing prices, fostering new growth engines and reforming the nation's economic systems. He said the ministry will launch unprecedented discount promotions on agricultural, livestock and fisheries products while lowering wholesale supply prices to curb rising price pressure fueled by the Middle East conflict and keep second-half consumer inflation below 3 percent. It will

1d agoBy Jun Ji-hye
Korea to keep inflation below 3%, accelerate won internationalization

Financial authorities to discuss single-stock leveraged ETF risks Thursday

Financial authorities will convene a high-level meeting Thursday to discuss possible measures for single-stock leveraged exchange-traded funds (ETFs), as policymakers move to address mounting concerns that the products are amplifying swings in Korea's stock market. The meeting, expected to be held under the government's macroeconomic and financial issues consultative group known as the F4, will bring together officials from the Ministry of Finance and Economy, the Financial Services Commission, the Financial Supervisory Service and the Bank of Korea. The discussions come after weeks of increasingly volatile trading, with single-stock leveraged ETFs drawing growing scrutiny from regulators and market participants who say the products have become a significant driver of sharp price movements. The KOSPI plunged more than 8 percent during Monday's session, triggering the market's seventh circuit breaker of the year and intensifying calls for a policy response. Deputy Prime Minister and Finance Minister Koo Yun-cheol said last week during a National Assembly session that authorities were clos

Jul 13, 2026By Lee Kyung-min
Financial authorities to discuss single-stock leveraged ETF risks Thursday

BOK poised for rate hike Thursday as markets eye further tightening

The Bank of Korea (BOK) is widely expected to raise its benchmark interest rate on Thursday, with markets focusing on whether the central bank will signal further tightening, analysts said Monday. The BOK is anticipated to raise its policy rate by 0.25 percentage points, to 2.75 percent, at Thursday's Monetary Policy Board meeting, in what would mark its first rate increase since January 2023. Markets are increasingly eyeing another 0.25 percentage point hike as early as August or October. Citibank expects the central bank to raise rates unanimously this week. "We expect the BOK to hike its policy rate by 25 basis points to 2.75 percent without a dissenting opinion. We expect Gov. Shin Hyun-song's press conference will likely point to a gradual pace of hiking cycle for the second half of 2026, implying a 25 basis points hike per quarter," Citibank economist Kim Jin-wook wrote in a report. Citibank expects the BOK to continue its gradual tightening cycle, with additional 0.25 percentage point hikes in October, January and April in 2027, bringing the policy rate to a terminal rate of 3.5 pe

Jul 13, 2026By Lee Hyo-jin
BOK poised for rate hike Thursday as markets eye further tightening

Foreign exchange authorities prioritize market imbalances over exchange rate level

As the won-dollar exchange rate remains at unusually elevated levels despite record-high exports fueled by strong semiconductor demand, market attention has increasingly turned to the question of how much ammunition foreign exchange authorities have. Typically, stronger exports lead to increased dollar inflows, which support the won and push down the exchange rate. This time, however, the exchange rate has remained in the psychologically significant 1,500-won range for about two months. The won has fallen about 8 percent against the dollar this year, while the dollar index has risen about 3 percent during the first half. On Monday, the won also traded in the 1,500-won-per-dollar range before closing at 1,503.4 won in onshore trading, down 2.0 won. A prolonged period of won depreciation could fuel higher import costs, squeeze corporate margins and erode households' real purchasing power. Following the 1997 Asian financial crisis, Korea adopted a free-floating exchange rate system in which the won's value is driven by market demand and supply rather than government-set levels. More buyers

Jul 13, 2026By Jun Ji-hye
Foreign exchange authorities prioritize market imbalances over exchange rate level

Gov't to impose anti-dumping tariffs on PVC paste resin from 4 European nations

Korea's finance ministry said Friday it has decided to impose anti-dumping tariffs on polyvinyl chloride (PVC) paste resin products from four European nations starting next month on grounds they were imported below fair prices. Under the decision, Korea will impose anti-dumping tariffs of 25.79 percent to 31.55 percent from next month to August 2031 on the products imported from Germany, France, Norway and Sweden, according to the Ministry of Finance and Economy. PVC paste resin refers to fine-particle resin widely used in interior building materials and other industrial goods, such as wallpapers and gloves. The decision came after Korean chemical firm Hanwha Solutions filed a complaint against a number of European exporters in July last year. The country's trade commission launched an investigation the following month and recommended the finance ministry impose anti-dumping duties in June of this year. "The government plans to continue monitoring products imported at low prices that cause disruptions in the domestic market, protect our industries from dumping activities and establish a f

Jul 10, 2026By Yonhap
Gov't to impose anti-dumping tariffs on PVC paste resin from 4 European nations

BOK chief says rate hike needed at appropriate time

Bank of Korea (BOK) Gov. Shin Hyun-song on Thursday reiterated the need to raise interest rates at an appropriate time, reinforcing expectations that the central bank could begin a rate-hiking cycle as early as next week's policy meeting. "Given that inflation remains above target, and considering improving economic growth and mounting financial stability risks, I believe it will be necessary to raise the base rate at an appropriate time," Shin said during a National Assembly meeting. He added that robust growth fueled by the semiconductor sector is expected to continue, while inflation is likely to remain above the BOK's target for a considerable period. "The timing of a rate hike will be determined after comprehensively assessing inflationary pressures and the pace of economic recovery," Shin said. The remarks were widely interpreted as his latest hawkish signal ahead of the Monetary Policy Board's rate-setting meeting scheduled for next Thursday. The central bank has kept its benchmark rate unchanged at 2.5 percent since May 2025. In recent months, the central bank chief has repeatedly

Jul 9, 2026By Lee Hyo-jin
BOK chief says rate hike needed at appropriate time

Tighter ETF rules likely as gov't moves to strengthen investor protection

The government and the ruling party are weighing tighter rules for single-stock leveraged exchange-traded funds (ETFs) linked to Samsung Electronics and SK hynix after the products came under fire for exacerbating volatility in the domestic stock market, according to industry officials Thursday. With regulators signaling plans to strengthen investor protection and safeguard market stability, policymakers are expected to consider tightening investor eligibility requirements, lowering leverage limits, restricting approvals for new single-stock leveraged ETFs and strengthening oversight of fund size and rebalancing practices. Heightened market volatility since the high-risk products were introduced is reflected in market data. The KOSPI 200 Volatility Index, or VKOSPI, stood at 70.7 on May 27, when 14 leveraged ETFs and two inverse ETFs tracking the two major chipmakers, which together account for more than half of the KOSPI's market capitalization, began trading simultaneously. It had risen to 93.8 by June 30, exceeding the previous high of 89.3 reached during the 2008 global financial cr

Jul 9, 2026By Jun Ji-hye
Tighter ETF rules likely as gov't moves to strengthen investor protection

70% of Koreans back pursuing EU-style economic community with Japan: survey

Nearly 70 percent of Koreans support pursuing an EU-style economic community with Japan, while 60 percent of Japanese respondents agreed, according to a survey released Monday by the Korea Chamber of Commerce and Industry (KCCI). KCCI, which has repeatedly floated the idea of a Korea-Japan economic community as a response to shifting global trade rules, commissioned Hankook Research to survey 500 people each in Korea and Japan. Some 69.8 percent of Korean respondents favored forming an EU-style bloc, either immediately or over the medium term, versus 59.8 percent of Japanese respondents. Support among Japanese who had visited Korea in the past five years reached 74.5 percent, compared with 45.4 percent among those who had not. Support for expanded tourism cooperation stood at 76.8 percent in Korea and 58 percent in Japan. A majority in both countries — 60.4 percent of Koreans and 44.8 percent of Japanese — backed allowing travel between the two countries using only a national ID card instead of a passport. Only 17.5 percent of Japanese citizens held a passport as of February 2025, ac

Jul 7, 2026By Jhoo Dong-chan
70% of Koreans back pursuing EU-style economic community with Japan: survey

Gov't to unveil property tax revision this month: finance minister

Korea will unveil property tax revisions later this month as part of its effort to strike a balance between recurrent and transaction taxes, the finance minister said Tuesday. Finance Minister Koo Yun-cheol made the remark during an interview with MBC Radio, a local broadcaster, noting the government intends to make a final decision after gathering opinions from the public. "Basically, we aim to establish a property market centered on actual residents, under the principle that homes are for living, not buying," Koo said, reflecting the government's efforts to curb speculative trading. Koo said the government will review various aspects of real estate taxation, including reducing benefits of long-term ownership for those who have not actually lived in their properties, while falling short of offering more details. "We are reviewing (the property tax) from the perspective that the two should be balanced," Koo said, when asked if the government is currently seeking to revamp both recurrent and transaction taxes. Touching on the three recent megaprojects announced by the government, Koo said

Jul 7, 2026By Yonhap
Gov't to unveil property tax revision this month: finance minister
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