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Monetary Policy Decision(May 29, 2025)

The Monetary Policy Board (MPB) of the Bank of Korea decided to lower the Base Rate by 25 basis points,
from 2.75% to 2.50% for the intermeeting period.

2025 Central Banking Study Program

Strengthening participant capacities and
enhancing communication channels among central banks

BOK Base Rate 2.50% Inflation Target 2.0%

BOK Issue

Korea Economic Outlook Economic Outlook (May 2025) Economic growth is expected to slow to 0.8% this year, falling significantly below the February forecast of 1.5%, as the recovery of economic sentiment has been delayed beyond expectations due to domestic and global uncertainties, and due to U.S. tariff policies that have been strengthened compared to the beginning of the year. 2025. 05. 29

Monetary Policy Report Executive Summary for Monetary Policy Report (March 2025) The Bank of Korea has shifted its monetary policy stance, cutting the Base Rate by 0.75%p in total on three occasions as downward pressure on economic growth has increased amid a stabilization in inflation and a slowing trend in household debt. 2025. 03. 13

BOK Working Paper BOK Working Paper No.2025-3, BOK-LOOK: A Semi-Structural Model for Korea’s Open Economy and Monetary Policy Analysis This paper introduces BOK-LOOK, a large-scale, semi-structural model developed by the Bank of Korea to support its forecasting and policy analysis. Inspired by the FRB/US model, it is estimated using a fully Bayesian method to ensure robust parameter estimation and empirical consistency. The model employs a VAR-based expectations framework and polynomial adjustment cost specifications to balance theoretical coherence with empirical adaptability. The model features a detailed external sector by the inclusion of a high-resolution foreign blocks and financial synchronization channels that captures the impact of the global business and financial cycle to Korean economy. Consequently, BOK-LOOK is tailored to generate internally consistent projections for key macro variables and supports various scenario analyses. Another distinctive feature is its comprehensive treatment of financial stability concerns through the explicit incorporation of household debt and housing prices dynamics, reflecting Korea's unique economic and financial characteristics. By providing both economic forecast and counterfactual analysis capabilities, the model establishes a coherent framework for understanding macroeconomic dynamics and informing monetary policy decisions. 2025. 02. 03

Speeches 2025 New Year Speech by Governor Chang Yong Rhee Ladies and gentlemen, Before delivering my New Year's speech, I would first like to express my deepest condolences and sympathy to the victims and their families affected by the tragic plane crash. Today marks the beginning of our first day of work in 2025. I had hoped to greet you with a message of hope and a bright future, but recent events have put a damper on that. I now stand before you with a very heavy heart due to the recent political upheavals and the tragic incident. 2025. 01. 02

Press Releases Assessment of Financial and Economic Impacts Following the Declaration of Martial Law and Approach to Response The Bank of Korea (BOK) convened an irregular Monetary Policy Committee meeting immediately after the declaration of martial law to implement market stabilization measures. Additionally, Emergency Task Force meetings have been held on a daily basis to assess domestic financial and economic conditions. 2024. 12. 15

Korea Economic Outlook Economic Outlook (November 2024) Economic growth is expected to moderate from 2.2% this year to 1.9% next year, with the recovery of domestic demand remaining moderate and growth in exports, which has been strong over the past quarters, gradually slowing down. 2024. 11. 28

BOK Regional Economic Report (BOK Golden Book) Regional Economic Report (September 2024) Our survey results show that regional economic activity in the third quarter of 2024 slightly improved compared to the previous quarter. Manufacturing production remained flat, with an increase in the semiconductor and display industries, despite a decrease in the motor vehicles and iron & steel industries. Services production increased slightly, with an increase in the real estate and transportation industries despite remaining flat in the wholesale & retail trade and finance & insurance industries. 2024. 10. 17

Research Papers

BOK Working Paper (in English) BOK Working Paper No.2025-12, Demographic Shifts and the Real Interest Rate in an Open Economy: The Case of Korea Author: Jae Won Lee(Bank of Korea), Woong Yong Park(Seoul National Univ.), Seolwoong Hwang(Bank of Korea) This study investigates the impact of... 2025.06.04

BOK Working Paper (in English) BOK Working Paper No.2025-13, Population Aging and Financial Stability: An Empirical Analysis Author: Hun Jang(Bank of Korea) This study empirically examines the impact of population aging on financial stability. Constructing an unbalanc... 2025.06.04

BOK Working Paper (in English) BOK Working Paper No.2025-11, A Large Bayesian Vector Autoregression of the Yield Curve and Macroeconomic Variables with No-Arbitrage Restriction Author: Sunho Lee(Bank of Korea), Kyu Ho Kang(Korea University) Interactions between macroeconomic variables and the government bond market are of m... 2025.05.16

BOK Working Paper (in English) BOK Working Paper No.2025-10, Demand for Home Pension and Reverse Mortgage: An Information Provision Survey Experiment Author: Duk Gyoo Kim(Yonsei University), In Do Hwang(Bank of Korea) Elderly poverty is a distinctive issue associated with the population structure ... 2025.05.15

BOK Issue Note The Shift Toward Experienced Hires : Implications for Youth Employment [BOK Issue Note 2025-01] 1. Recently, an increasing number of companies have been favoring experienced hires over entry-level candidates, shifting from regular public recruitm... 2025.05.09

BOK Issue Note Impact of shareholder return policy on firm value [BOK Issue Note 2025-05] Interest in shareholder returns is growing as a means of enhancing the value of domestic listed companies (Value-up Program). Expanding shareholder re... 2025.05.08

Annual Reports 2024 Annual Report 1. This is an unofficial translation prepared by the Bank's staff based on the original Korean text released on March 28, 2025. 2. Contents &... 2025.05.02

BOK Issue Note Transforming The Future: The Impact of Artificial Intelligence in korea [BOK Issue Note 2025-02] This paper examines the transformative effects of Artificial Intelligence (AI) in Korea. Korea is among the global frontrunners in AI adoption, with h... 2025.04.28

Monetary Policy Reports Monetary Policy Report (March 2025) - This report is the English version of the Bank of Korea's Monetary Policy Report published on March 13, 2025. In case of any inconsistency, t... 2025.04.24

BOK Working Paper (in English) BOK Working Paper No.2025-9, Investment Giants in Emerging Markets Author : Daisoon Kim(NC State University), Jee Won Park(Korea Institute for International Economic Policy), Inhwan So(Bank of Korea) A small group o... 2025.04.21

BOK Issue Note Potential Growth of Korea and Its Outlook [BOK Issue Note 2024-33] 1. This paper estimates the potential growth of the Korean economy, taking into account the impact of the COVID-19 pandemic, demographic shifts, and s... 2025.04.03

Korea Economic Outlook Korea Economic Outlook (February 2025) In order to provide a detailed understanding of Korea's economic outlook, a translation of the Economic Outlook is now published quarterly. 2025.04.01

Quarterly/Economic Analysis [Vol.31 No.1] Analysis of Government Spending Multiplier: A Multivariate VAR Model Approach Author: Sehun Kim(Sogang University), Joonyoung Hur(Sogang University) Economic agents base decisions on expectations of future fiscal policy changes... 2025.03.31

Quarterly/Economic Analysis [Vol.31 No.1] The Relationship between Liquidity Return and Exchange Rate Based on the Scapegoat Theory: Evidence from South Korea Author: Cheolbeom Park(Korea University) Using data from South Korea, this paper shows that the explanatory power of liquidity returns for the excha... 2025.03.31

BOK Working Paper (in English) BOK Working Paper No.2025-8, Monetary-Fiscal Policy Mix and Inflation in Korea Author : Sora Chon(Inha University), Wongi Kim(Sungshin Women's University), Seri Shim(Bank of Korea) This paper investigates the monetary-fisca... 2025.03.28

BOK Issue Note Impact of Climate Change Risk on the Real Economy: Climate Action Scenario Analysis [BOK Issue Note 2024-30] ① This paper examines the impact of climate change risk on Korea's real economy. The results show that climate change risk exerts a negative effect on... 2025.03.20

BOK Issue Note Analysis of Regional Economic Growth Factors and Balaced Development Centered on Hub Cities [BOK Issue Note 2024-15] As Korea experiences a slowdown in economic growth, the gap between regional growth rates has recently been further widening. In particular, compared ... 2025.03.18

BOK Working Paper (in English) BOK Working Paper No.2025-7, Monetary and central bank information shocks: Tales from alternative identifications Author : Bosung Jang(Korea Capital Market Institute), Inhwan So(Bank of Korea) Jarociński and Karadi (2020) proposed a straightforward method to de... 2025.03.14

BOK Working Paper (in English) BOK Working Paper No.2025-6, A Properly Ordered Zero Sign Restrictions on VARX for a Small Open Economy Author : Ki-Ho Kim(Bank of Korea) Responses to shocks of endogenous variables and those to shocks of exogenous variables are mixed when rotation mat... 2025.03.14

Monetary Policy Reports Executive Summary for Monetary Policy Report (March 2025) Monetary Policy Report at a Glance Monetary Policy Decisions Base Rate Cut from 3.50% to 2.75% The Bank of Korea has shifted its monetary pol... 2025.03.13

Press Releases

Industrial Loans of Depository Corporations during Q1 2025 □ Depository corporations increased their industrial lending by 17.3 trillion won in the first quarter of 2025. 2025.06.10

Balance of Payments during April 2025 (preliminary) □ During April 2025, the Korean current account registered a surplus of 5.70 billion dollars. □ Looking at the financial account, net assets increase... 2025.06.10

Gross National Income: First Quarter of 2025 (Preliminary) ◈ Real gross domestic product (real GDP, chained volume measure of GDP) decreased by 0.2 percent in the first quarter of 2025 compared to the previous... 2025.06.05

National Accounts in the Year 2024 (Preliminary) ◈ Real gross domestic product (real GDP, chained volume measure of GDP) increased by 2.0% in 2024 compared to the previous year. ※ Please see t... 2025.06.05

Official Foreign Reserves(May 2025) Please refer to attached files. 2025.06.05

Economic Outlook (May 2025) ▣ GDP growth forecast for 2025 has been sharply revised downward from 1.5% in February to 0.8%. ￭ The recovery in domes... 2025.05.29

★Monetary Policy Decision & Opening Remarks to the Press Conference(May 29, 2025) Monetary Policy Decision The Monetary Policy Board of the Bank of Korea decided today to lower the Base Rate by 25 basis points, from 2.75% to 2.50%.... 2025.05.29

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