The Bank of Korea's Monetary Policy Board — Who Sets Our Interest Rate?
If the United States has the FOMC, Korea has the "Monetary Policy Board." The policy rate that is the starting point for our deposit and loan interest is decided right here.
What Is the Monetary Policy Board?
The Monetary Policy Board is the Bank of Korea's top decision-making body, and it decides Korea's policy rate and monetary-policy direction.
The Monetary Policy Board is composed of a total of 7 members, including the Governor and Senior Deputy Governor of the Bank of Korea. Of these, the meetings that decide the monetary-policy direction are held eight times a year. The results are announced immediately, and the Governor explains the background in a press briefing.
A Recent Decision Example
For example, at its July 16, 2026 meeting, the Monetary Policy Board raised the policy rate from 2.50% to 2.75% per year, up 0.25 percentage points. This decision was unanimous among all 7 members.
In this way, the Monetary Policy Board adjusts rates by comprehensively looking at prices, the economy, financial stability, exchange rates, and so on. Sometimes it is unanimous, and sometimes the members' opinions differ; a minority opinion can serve as reference material for the market to gauge future policy.
The rate figures written here are meant to explain the decision at that point in time. This article does not predict where rates will go in the future.
The Bank of Korea's 2% Price-Stability Target
Since 2019, the Bank of Korea has set a 2% consumer-price inflation rate (year-over-year) as its price-stability target. Rather than hitting a specific month's inflation, it operates policy so that the inflation rate approaches 2% "over the medium term."
If prices run excessively above the target, it raises rates to calm them, and if they run excessively below, it responds accommodatively. This 2% target is also a standard shared by many central banks, including the U.S. Fed.
Frequently Asked Questions
Q. How does a Monetary Policy Board decision affect my loan?
The policy rate is the starting point for banks' deposit and loan rates. When the policy rate rises, variable-rate loan interest rises with a lag, and deposit interest tends to rise too. But market rates sometimes reflect expectations in advance of the decision.
Q. Does the Bank of Korea follow the U.S. Fed?
Because U.S. rates and the dollar have an impact through exchange rates and capital movement, the Bank of Korea also takes them into account. But it also considers its own domestic conditions such as prices, the economy, and household debt, so it does not always move in the same direction as the United States.
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