The Bank of Korea kept its policy interest rate unchanged after two consecutive interest rate hikes. Although inflation has declined somewhat, it is still above the target level, and the central bank suspended the pace of austerity as a result. The Bank of Korea kept the benchmark seven-day repurchase rate at 3.00% on Thursday, after the central bank raised this rate in July and August. The 23 economists surveyed by the media all expect interest rates to remain unchanged, and most of them expect another rate hike in November. The global AI boom and strong semiconductor exports continue to support economic growth. Policymakers are looking to see if these growth drivers will be channeled into domestic demand and drive up inflation, thereby strengthening the reasons for further interest rate hikes. South Korea's exports accelerated in September, surpassing US$120 billion for the first time. Semiconductor exports more than tripled from the same period last year, reaching a record high. The overall inflation rate fell to 2.9% last month, and the core inflation rate, which excludes volatile food and energy prices, fell slightly to 2.8%. Both are still above the Bank of Korea's 2% target. Bank of Korea policymakers expect steady economic growth and higher-than-target inflation to continue. They are also watching to see if the tense situation in the Middle East will increase cost pressure. The Bank of Korea said in a policy report earlier this month that the timing and pace of further rate hikes will depend on inflation, economic conditions, and financial stability.

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