Bank of Korea Keeps Rates Steady Amid Housing Surge, Debt Concerns

South Korea’s central bank, the Bank of Korea (BOK), has opted to maintain its benchmark interest rate at 2.5%, prioritizing financial stability amid surging housing prices and mounting household debt. The decision, announced on July 10, reflects the bank’s cautious stance as Seoul’s property market continues to accelerate, with annualized housing prices rising over 19% in June, according to Goldman Sachs.

Authorities have introduced cooling measures to temper the housing surge, and the BOK noted early signs of stabilization. However, household debt remains a pressing concern, prompting the bank to hold off on rate cuts despite slowing economic growth.

The broader economic landscape is marked by weakening exports, sluggish construction activity, and heightened uncertainty over global trade. Tensions with the United States have escalated, with President Donald Trump threatening to impose 25% tariffs on all South Korean imports starting August 1 if trade negotiations stall.