The Bank of Korea kept rates at 2.5% for the fourth consecutive meeting as tighter asset rules come into effect

South Korea’s central bank kept its benchmark interest rate unchanged at 2.5% for the fourth straight meeting on Thursday, as policymakers continued to flag household debt as a key risk.

The decision was in line with the expectations of economists polled by Reuters, and strict asset measures were implemented in Seoul aimed at curbing borrowing.

On October 15, South Korean media has given this information Stricter property regulations, along with tighter debt limits, will now apply to all 25 districts of Seoul, as well as 12 more in the surrounding Gyeonggi Province.

Previously, the strict rules applied to four of Seoul’s 25 districts.

Household debt is a major concern for the Bank of Korea, which has been reluctant to cut rates for fear of increasing demand for housing and raising loan levels.

Bank of America analysts wrote in an Oct. 20 note that “housing inflation in Seoul remains a top concern for policymakers this year, a serious impediment to additional easing in 2H25.”

He noted that house prices in central Seoul rose again in mid-September despite earlier rounds of cooling measures in June and September.

“With such measures, a sequential decline in domestic transactions is expected in the coming months, but in our view, it is still difficult to say whether the price increase can be fully contained,” he said.

The tariff decision also comes as South Korea faces uncertainty over its trade relationship with the US after both sides struggled to finalize details. The agreement was signed on July 30.

Under the deal, the Asian nation will invest $350 billion in the US, but South Korean President Lee Jae-myung warned. Reuters interview Transferring the entire amount in cash could trigger a financial crisis reminiscent of 1997.

There are negotiators It is reported that he will visit Washington this week to finalize the terms ahead of the APEC summit on October 31 in South Korea.

At the last meeting in August, The BOK raised its inflation forecast for 2025 to 2% from its May estimate of 1.9%, while its GDP growth forecast for the year was also revised up to 0.9% from 0.8% previously.

Domestic demand is expected to make a “moderate recovery” on the back of a supplementary budget and improving consumer sentiment.

“Exports are likely to show favorable movement for some time, but are likely to slow gradually as the impact of US tariffs expands,” the central bank said.

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