Bank of Korea Holds Rate at 2.5% Amid Housing Surge and Weak Won

The Bank of Korea (BOK) has maintained its benchmark interest rate at 2.5% for the third consecutive meeting, reflecting a cautious stance amid rising home prices in Seoul and a weakening Korean won. Despite previous rate cuts totaling 100 basis points since October 2024 aimed at supporting economic growth under President Yoon Suk Yeol's martial law decree and ongoing trade tensions, the central bank has paused due to concerns that further easing could spur housing market speculation and destabilize the currency. The government has implemented multiple property market curbs, including mortgage loan caps and land transaction permit zones, as Seoul's price-to-income ratio surpasses major global cities like London and Sydney. Analysts expect one final rate cut in November before a prolonged pause, balancing the need to support growth against financial stability risks. The won's depreciation to around 1,430-1,435 per US dollar has limited policy room, with foreign exchange authorities even intervening verbally to stabilize the currency. Overall, the BOK is closely monitoring domestic and external conditions, aiming to mitigate downside economic risks without fueling the overheated real estate market or currency volatility.