South Korea's Central Bank Raises Base Rate to 2.75% on July 16, Signals More Hikes Ahead

According to South Korea's central bank, the Bank of Korea raised its base rate by 25 basis points to 2.75% on July 16, signaling further interest rate increases ahead. Central Bank Governor Shin Hyun-sung stated that inflation is expected to remain above target for a considerable period, necessitating continued rate hikes.

The five major banks' six-month mortgage rates ranged from 4.13% to 6.58% as of July 16, reflecting a 15 basis point increase in COFIX, the funding cost index that hit 3.05% in June, the highest level in 19 months. Market analysts expect the central bank may raise rates three more times through early 2027, potentially bringing the base rate to 3.5% and pushing upper-tier mortgage rates above 8% later this year.