The Bank of Korea raised its rate for a second straight meeting to 3 per cent, citing mounting inflation risks as semiconductor exports support a stronger recovery. Bank of Japan Deputy Governor Ryozo Himino also urged timely tightening, warning that delay could require a sharper increase later. Core inflation is running at 2.6 per cent in South Korea, while a weak yen and rising chip prices add pressure in Japan.
The Bank of Korea raised its policy rate from 2.75 per cent to 3 per cent. The quarter-point increase at a second consecutive meeting was presented as a pre-emptive response to inflation risks during a stronger recovery led by semiconductor exports. The board voted 6-1; member Hwang Kun-il preferred to keep the rate at 2.75 per cent. The central bank therefore tightened policy before price pressures became more entrenched as growth accelerated.[1]
The bank raised its 2026 growth forecast to 3.3 per cent from the 2.6 per cent projection issued in May. Robust semiconductor exports and a recovery in domestic demand supported the higher estimate. Core inflation holding at 2.6 per cent year on year kept price stability at the centre of the decision as the growth outlook improved. One member's vote to hold rates showed that the timing of the increase still divided the board.[1]
Bank of Japan Deputy Governor Ryozo Himino said inflation remaining above the 2 per cent target could damage the economy and that rate increases should come in a timely manner. He identified the weak yen and chip prices lifted by AI demand as upside risks. In his view, waiting could require a sudden and larger increase later. Markets are now pricing an increase at the Bank of Japan's September meeting as nearly certain.[2]
