Bank of Korea holds at 2.5% and drops easing-bias language as growth risks tilt up

The Bank of Korea has maintained its base rate at 2.5%, aligning with market expectations while signaling an improved growth outlook. The focus on a favorable export sector, particularly semiconductors, indicates a key growth tailwind for the economy. Importantly, the bank has removed language suggesting room for future rate cuts, indicating a shift towards a more cautious stance. Although not overtly hawkish, this development suggests a confidence that further cuts may not be necessary soon. The BOK has also expressed concerns over housing price risks and FX volatility, highlighting a recently weakened won due to various external factors. On inflation, the BOK anticipates a gradual decline toward 2%, suggesting that while disinflation is underway, it is not complete. This overall strategy reflects a 'hold and watch' approach, supportive of recovery yet wary of potential market volatility.