Seoul: The Bank of Korea (BOK) raised the benchmark interest rate by 0.25 percentage points for the second consecutive meeting on Thursday, pushing the rate to 3 percent. This decision is part of the central bank's efforts to address rising inflationary pressures.

According to Yonhap News Agency, this move marks the highest interest rate level since January 2025 and comes as the first back-to-back hikes since early 2023. The Monetary Policy Board emphasized the need for preemptive measures to prevent widespread inflation and to maintain financial stability. Six out of seven board members supported the recent rate hike, while Hwang Kun-il suggested keeping the base rate unchanged.

Amid rising inflation, driven by higher oil prices and geopolitical uncertainties, the BOK remains committed to a hawkish monetary stance. Recent data indicated a 2.8 percent rise in consumer prices in July, exceeding the central bank's 2 percent target. Core inflation also saw a notable increase, further reinforcing the need for action.

In addition to addressing inflation, the central bank revised its economic growth forecast for 2026 to 3.3 percent from the previous 2.6 percent. This adjustment aligns with government predictions of 3 percent growth, as South Korea's economy has already shown significant expansion.

BOK Governor Shin Hyun-song described the rate hike as a necessary step to ensure macroeconomic stability. He emphasized the importance of proactive policy measures to stabilize inflation expectations and reduce the overall burden on economic growth.

The central bank is expected to assess upcoming economic data, including GDP growth and inflation rates, before its next rate-setting meeting. Additionally, the recent appreciation of the Korean won against the U.S. dollar is viewed positively, as a stronger won could help mitigate import-related inflation.