Korea Economics - March 2026

Bank of Korea (BoK) holds interest rate at 2.50% as expected, mortgage rates hit a 27-month high and the Won weakens against the USD as Middle East war strains inflation.

BoK holds rates as policymakers give dot-plot like forward guidance of extended pause: The South Korean central bank held rates in February at 2.50% since May 2025 after a 100 basis points (bps) of easing since October 2024. The February vote had their seven members unanimously support to hold the policy rate.

Additionally, the BoK adopted a U.S. Fed style dot plot chart of 6-month rate path showing rates remaining where they are. The publication will be released quarterly on the months of February, May, August and November when the BoK economic outlook is announced. The seven members of the financial and monetary committee have three voting points each which yielded in 16 points for the rate to remain at 2.50%, 4 points for a standard cut of 25 bps in the coming 6 months and a remaining point for a 25 bps hike.

See more Korean economic data at our Macro Tracker | Centro Research

Mortgage rate trajectory: As of February 2026, mortgages rates rose for the fifth consecutive month to 4.32% as compiled by the weighted average of the largest five mortgage lenders. This marks the highest level since November 2023. The top end fixed-rate mortgage rate reached 7.01%. Additionally, the share of newly extended mortgage loans from deposit-taking banks at fixed rates continues to drop in this latest print down 4.5 percentage points month-over-month showing borrowers’ concern about future rate expectations – 75.6% of new mortgages were borrowed at fixed rates in January vs 71.1% in February.

KRW falls vs USD in line with other Asian currencies driven by Iran war: As the region that depends on importing most oil through the Strait of Hormuz, Asian currencies are selling off as oil prices surge. Expectations of war disruptions drive this sell as inflation expectations increase. The Korean Won continues its sell off — USDKRW 1,516 at Monday, March 30 open —  following previous periods of sustained higher CPI inflation, trade tariff and political disruptions.

Sources:

Bank of Korea, 26 Feb 2026, Monetary Policy Committee Announcement, https://www.bok.or.kr/eng/bbs/E0000627/view.do?nttId=10096671&searchCnd=1&searchKwd=&depth2=400417&depth3=400022&depth=400022&pageUnit=10&pageIndex=1&programType=newsDataEng&menuNo=400022&oldMenuNo=400022

Bank of Korea, Economic Statistics System (ECOS), 1.3.3.2.1. Interest Rates, Variable Loans to Households (Houses) 3), Percent per Annum, https://ecos.bok.or.kr/#/SearchStat

Bank of Korea, Economic Statistics System (ECOS), 1.3.3.4.1. Interest Rates, Loans at fixed rates (Mortgages), Based on newly extended, https://ecos.bok.or.kr/#/Short/725bba