Bank of Korea Base Rate — Current & History (2017–2026)
See the current Bank of Korea base rate and every change since 2017 at a glance. For reference only — check bok.or.kr for the latest official decision.
Statutory formulaBased on 2026 rulesSources: Bank of Korea
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Monetary Policy Board decision · Please verify the latest decision at bok.or.kr
Base Rate Trend (2017–2026)
Base Rate Change History
| Decision date | Rate | Change | Direction | Note |
|---|
How does the base rate pass through to loan rates?
The base rate set by the Bank of Korea affects how much it costs commercial banks to fund themselves, and that funding cost feeds into loan rates. The key link in practice is COFIX (Cost of Funds Index) — the average funding rate across time deposits, savings, and bank bonds at 8 domestic banks, published by the Korea Federation of Banks on the 15th of each month. When the base rate rises, bank deposit rates rise too, which shows up in the next month's COFIX. Banks add their own spread on top of COFIX to price variable-rate mortgages, and a newly published COFIX typically applies to new and renewed loans starting the 16th of the following month — a 1–2 month lag between a base rate decision and the change actually reaching your loan.
Reading hike and cut cycles from the table
Splitting the history table into hike and cut phases makes the pattern clear. 2022 was a hiking cycle responding to surging inflation: on July 13 the BOK delivered its first-ever 50bp "big step", taking the rate from 1.75% to 2.25%, then repeated it on October 12, ending the year at 3.25%. Hikes paused after reaching 3.50% on January 13, 2023, holding for about 21 months before cutting to 3.25% on October 11, 2024 — the first cut in 3 years and 2 months. Gradual cuts continued into 2025 down to 2.50%, before a 0.25%p hike to 2.75% on July 16, 2026 marked the first hike reversal in 3 years and 6 months, followed by another 0.25%p hike to 3.00% on August 27, 2026 — a second consecutive increase. Reading the change column, a run of positive values is a hiking phase and a run of negative values is a cutting phase.
Fixed vs. variable — what should guide the choice?
Whether fixed or variable is better depends less on today's absolute rate than on where rates are expected to go. Early in a hiking cycle, fixed is often favored to lock in before rates climb further; once a cutting cycle looks likely, variable can lower interest costs at each COFIX refresh. Fixed rates typically start higher than variable ones, though, so the comparison should weigh the full rate path over the loan term, not just today's number. Shorter repayment terms are less exposed to future direction changes, making variable relatively more attractive, while longer terms may favor locking in certainty with fixed. These are general tendencies only — actual decisions depend on individual repayment plans and income stability, so confirm exact terms with a financial institution.
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How the base rate reaches your loan
A cut in the base rate does not pass straight through to loan rates. Several steps sit in between, each adding lag and damping.
Who decides, and how
The Bank of Korea's Monetary Policy Board meets eight times a year. Its seven members target price stability while also weighing growth and financial stability.
A press conference follows immediately and minutes appear about two weeks later, revealing whether the vote was split — a common clue to the next move.
The base rate applies to the Bank's repo transactions with financial institutions, anchoring the short-term money market from which other rates follow.
The lag before loan rates move
A change first moves banks' funding costs — deposit rates and bank bond yields — which then feed into indices such as COFIX, published monthly, adding lag immediately.
Variable-rate loans reset on their own cycle, so a six-month loan waits for its next reset. Months can pass between a cut and a lower payment.
The margin moves independently, reflecting credit risk and competition, so a base rate cut can be offset by a wider margin.
Deposits and loans respond at different speeds
Loan rates tend to rise quickly and fall slowly, while deposit rates do the reverse — which is why the spread widens in both directions.
The Korea Federation of Banks publishes each bank's spread monthly, and the differences between banks are worth comparing before committing.
In a falling-rate phase, exercising the right to request a rate reduction is worth considering where income or credit score has improved; a refusal carries no penalty.
Legal basis
- Setting the base rate — Bank of Korea Act art. 28
- Composition of the Board — art. 13
- Spread disclosure — banking supervision rules
- Right to request a rate reduction — Banking Act art. 30-2