BOK begins tightening cycle as chip boom fuels growth, inflation concerns - The Korea Times

The Bank of Korea began tightening policy as Korea’s chip boom accelerated growth, while inflation risks prompted a first rate hike in three and a half years. On Thursday, the Monetary Policy Board raised the benchmark interest rate by 25 basis points to 2.75 percent, its first increase since January 2023. Governor Shin Hyun-song said further increases remain possible until inflation is “converging sustainably” to the 2 percent target. The decision was driven by a sharper growth outlook powered by global AI demand and semiconductors, with June exports topping $100 billion for the first time on record. Consumer prices rose 3.2 percent in June. Despite easing oil prices, Shin warned higher costs and a weaker won are likely to keep inflation elevated, especially as semiconductor windfalls spill into domestic demand.