Bank of Korea Rate Freeze Jan 2026: Benchmark Held at 2.5% Amid Won Crisis

Your mortgage relief is on ice as the Bank of Korea stands its ground. The Bank of Korea (BOK) Monetary Policy Board decided to keep the benchmark interest rate at 2.5% during its meeting on January 15, 2026. This marks the fifth consecutive hold since July, as a free-falling won and stubborn inflation limit the space for any policy easing.

Currency Volatility Sparks Bank of Korea Rate Freeze Jan 2026

The primary driver behind the freeze is the extreme turbulence in the foreign exchange market. The Korean won plunged to the mid-1,480 range against the U.S. dollar late last month, hitting a 16-year low. Despite heavy intervention by authorities, the currency has remained weak, closing at 1,477.5 won on Wednesday. This 10-day losing streak is the longest since the 2008 global financial crisis. Governor Rhee Chang-yong noted that the won is "markedly undervalued," suggesting that a rate cut could trigger further capital flight.

Housing Market and Inflation Concerns

Domestic factors are equally concerning. Consumer prices rose 2.3% in December, staying above the bank's 2% target for four months. Additionally, Seoul's apartment prices rose 0.18% in the first week of January, marking the 48th consecutive week of increases. The BOK is clearly prioritizing financial stability over growth stimulus as it monitors the cooling effect of government mortgage regulations.