Aerial view of Seoul downtown city skyline with vehicle on expressway and bridge cross over Han river in Seoul city, South Korea.<\/p>\n
Mongkol Chuewong | Moment | Getty Images<\/p>\n
South Korea’s central bank kept its policy rate unchanged at 2.5% for its second straight meeting to assess housing prices in the capital further, after prices had spiked earlier in the year.<\/p>\n
The move was also in line with expectations of economists polled by Reuters.<\/p>\n
The Bank of Korea said<\/a> that inflation was stable and economic growth had shown “modest improvement,” but warned that housing prices in Seoul and its surrounding areas, along with household debt, needed closer monitoring.<\/p>\n The central bank said household loan growth has slowed sharply, but expectations for higher home prices remain strong.<\/p>\n The BOK also upgraded its inflation forecast for 2025 to 2% from its May forecast of 1.9%, while the GDP growth forecast for the year was also revised to 0.9% from 0.8% previously.<\/p>\n It expects domestic demand to make a “modest recovery,” due to a supplementary budget and improvement in consumer sentiment.<\/p>\n “Exports are likely to show favorable movements for some time, but are likely to gradually slow as the impacts of U.S. tariffs expand,” the central bank said.<\/p>\n In its previous meeting,<\/a> the BOK had also held rates, citing a need to assess the impact of recent measures aimed at cooling Seoul’s housing market.<\/p>\n The central bank decision came just days after South Korean President Lee Jae Myung met U.S. President Donald Trump<\/a> earlier this week, which led to a series of agreements between both sides.<\/p>\n These include multibillion-dollar investment pledges from South Korean companies, record $50 billion aviation purchases by Korean Air, and cooperation in areas such as shipbuilding and energy.<\/p>\n Under a July trade deal, Seoul would invest $350 billion in the U.S., including $150 billion for shipbuilding. Seoul then saw its so-called “reciprocal” tariffs for its exports to the U.S lowered to 15% from 25%, including for automobiles.<\/p>\n The country had seen net exports power its growth in the April to June period to a better-than-expected showing, with GDP expanding 0.6% quarter over quarter and 0.5% from a year ago.<\/p>\n