South Korea’s central bank has raised interest rates for the first time in more than three years, signalling that further increases could follow as the economy benefits from a booming artificial intelligence chip industry
The Bank of Korea said the decision reflects robust economic growth, persistent inflation and rising risks to financial stability.
Officials pointed to strong demand for AI-related semiconductors as a key driver of the country’s economic expansion, with chip exports continuing to support growth.
The central bank also warned that inflation remains above its target and said higher borrowing costs are needed to help contain price pressures and safeguard financial stability.
The move marks a shift towards tighter monetary policy as policymakers seek to balance sustained economic momentum with the need to keep inflation and financial risks under control
