BOK Board Members: "Need to Assess Effects of Consecutive Rate Hikes"... Majority Support Further Tightening

Minutes of the 20th Monetary Policy Board Meeting
"Need to maintain the restrictive policy stance"

The Bank of Korea's Monetary Policy Board agreed to hold the benchmark interest rate at 3% per annum last month, saying it needed to assess the effects of consecutive rate hikes in July and August. However, a majority of board members were found to agree that further tightening may be necessary.

According to the minutes of the Bank of Korea's 20th regular Monetary Policy Board meeting of 2026, released on November 11, all seven board members unanimously voted at their meeting on October 22 to keep the benchmark interest rate at 3% per annum. The Board had raised the rate by 0.25 percentage points, from 2.50% to 2.75%, in July, and by another 0.25 percentage points, from 2.75% to 3.0%, in August. 

The need for time to assess the effects of the rate hikes was cited as a reason for holding the rate steady. One board member said, "The current tightening stance needs to be maintained. However, at this meeting, it is advisable to keep the benchmark interest rate at its current level and monitor the effects of the two previous preemptive rate hikes, as well as how elevated domestic and external uncertainties develop."

Another board member said, "Given the current overall economic conditions, I believe the need for restrictive monetary policy has increased. However, since we raised the benchmark interest rate twice in a row to respond preemptively to inflationary pressures, it is appropriate to assess the effects of those hikes and then determine the direction of policy going forward."

Another board member said, "Monetary policy going forward should be determined, including the timing of any further benchmark rate hikes, after closely assessing how past rate increases affect policy variables such as inflation, growth, and financial stability, and the extent to which export-led growth is spilling over into domestic demand and price pressures on the demand side. It should also take into account the course of developments in the Middle East, changes in monetary policy in major economies, volatility in global financial markets, and the effects of the government's economic policies."

Another board member said, "It would be advisable to monitor inflation trends and financial stability conditions before deciding on the timing and pace of any further rate hikes."

Bank of Korea Governor Shin Hyunsong presides over a meeting of the Monetary Policy Board at the Bank of Korea in Jung-gu, Seoul, on October 22, 2026. Photo by Kim Hyunmin.

Some members also said that any decision to raise interest rates further should be made cautiously. One board member said, "The effects of the two preemptive rate hikes have passed through to market interest rates and the exchange rate, reducing the degree of easing in financial conditions. As a result, there is now room to adjust the pace of policy implementation. We need to carefully assess whether and when to raise rates further."

Another board member said, "This is a time to seek an appropriate balance between the need for additional monetary tightening in light of inflationary pressures and financial imbalances, on the one hand, and consideration for sectors left out of the economic boom, on the other."

The board also discussed the spillover effects of the semiconductor boom. In response to questions from board members, the Bank of Korea estimated that "the effects of performance bonuses and dividend payments by semiconductor companies, as well as increased tax revenue, on boosting private consumption are around 0.4%." It added that "the resulting boost to growth, taking into account private consumption's share of gross domestic product (GDP) and its import-inducing coefficient, is in the low 0.1% range."

One board member said, "Although nominal income in our economy has increased substantially, the spillover to private consumption and employment remains gradual. We need to closely monitor the pace and extent to which the strong semiconductor market is spreading to other domestic sectors, alongside trends in the global AI cycle."

Regarding the stock and real estate markets, the Bank of Korea said, "If stock prices continue to rise and household incomes increase, some of the funds realized as gains in the stock market could flow into the real estate market." It also noted, "In a situation like the present, when stock prices are undergoing a correction, it is difficult to rule out the possibility that the reverse wealth effect could reduce households' capacity to consume and purchase homes."

The Bank of Korea's Monetary Policy Board will hold its final monetary policy meeting of the year on November 26 and announce its benchmark interest rate decision and revised economic outlook.

This content was produced with the assistance of AI translation services.