Bank of Korea raises benchmark interest rate for first time in 3½ years

The Bank of Korea's Monetary Policy Board raised the benchmark interest rate by 25 basis points — from 2.50 percent to 2.75 percent — to rein in inflation.

The hike is the first since Jan. 13, 2023, when the board lifted the rate from 3.25 percent to 3.50 percent, ending a roughly three-and-a-half-year pause. It was also only the 28th rate increase in the board's history.

Gov. Shin Hyun-song explained the decision in the board's monetary policy statement. Growth was gaining momentum led by exports and investment, he said, while inflation was expected to remain above the target level for a considerable period. "Financial stability risks are also persisting, making it appropriate to raise the benchmark interest rate by 0.25 percentage points," Shin said.