The Bank of Korea raised its benchmark rate by 25 basis points to 2.75% on Wednesday, the first increase since January 2023, as headline inflation climbed to 3.2% in June and consumer prices exceeded 3% in both May and June.
The decision comes as South Korea's economy shows signs of strength, with gross domestic product expanding 3.8% in the first quarter and exports surging 71% year-on-year in June. The central bank raised its 2026 growth outlook to 3% earlier this week.
The won traded at 1,484.86 against the dollar on Wednesday. Regional markets were under pressure, with the KOSPI index falling 6.21% and Japan's Nikkei dropping 3.16%. Oil prices edged higher, as West Texas Intermediate crude rose 0.64% to $80.11 a barrel.