Bank of Korea raises key rate to 3% as inflation stays high and chip exports support growth

The Bank of Korea raised its benchmark interest rate by 25 basis points to 3%, making a second straight increase as it tries to rein in inflation while the economy remains supported by strong semiconductor exports. The move returns the policy rate to the 3% range for the first time in about 18 months and reflects concern that price pressures are not easing quickly enough. Officials also pointed to robust chip demand, including demand tied to artificial intelligence, as a factor boosting growth and complicating the inflation outlook. The decision matters for South Korean households and businesses because higher borrowing costs can slow spending and investment even as the export-driven economy continues to outperform expectations.