Bank of Korea seen raising base rate to 2.75% on July 16

The Bank of Korea is expected to lift its base rate to 2.75% on July 16, marking its first increase in more than three years, with economists in a Reuters poll also pointing to another hike by the end of the year. Consumer inflation reached 3.2% in June, a 2-1/2-year high, and has stayed above the central bank’s 2% target for four straight months. Economists expect inflation to average about 3% through the second half of the year, while stronger growth, rising house prices and elevated household debt have given policymakers room to tighten. Most respondents see the policy rate reaching 3.00% by the end of the fourth quarter, and median forecasts show it rising to 3.25% in the first quarter of 2027 and staying there through at least the end of next year. Analysts say high oil prices linked to the U.S.-Israeli war on Iran and a weaker won are adding to price pressures, with some investors watching for any signal that could open the way to back-to-back rate hikes.