BOK Faces Increased Pressure for Another Rate Hike Amid Widening US-Korea Interest Gap

The US Federal Reserve raised its benchmark interest rate by 0.25 percentage points on Thursday, widening the gap between Korea's and the US' rates to 1.00 percentage point.

This increase raises the likelihood of another hike from the Bank of Korea (BOK), which has already raised its benchmark rate in both July and August.

The BOK forecasts that the rising nominal growth rate, currently at 26.4% year-over-year in Q2 of 2026, will lead to greater inflationary pressure and amplify financial imbalances.

Kwon Min-soo, senior deputy governor of the BOK, emphasized the importance of price stability, citing Federal Reserve Chair Kevin Warsh's comments on potential further rate hikes.