Central Bank Interest Rates Raised in South Korea and the Philippines
August 27, 2026
entral bank interest rates were hiked by 25 basis points today in South Korea and the Philippines to 3.0% and 5.0%, respectively. In South Korea’s case, this was the second such tightening in a row from a 2.5% base maintained from May 2025 until the monthly review this past July. Despite slightly lower inflation in Korea this month, a statement from the Bank of Korea explains,
Inflation is expected to remain above the target level for a considerable time as the pass-through of elevated cost pressures persists and as demand-side pressures also gradually increase with improving income conditions. Consequently, consumer price inflation is forecast at 2.7% for this year and 2.3% for next year. it is important to prevent inflationary pressures from becoming widespread through preemptive action, and it is also necessary to continue paying attention to financial stability risks.
At the Central Bank of the Philippines, today’s action was the third 25-basis point rate hike since April. Filipino inflation is targeted withing a two-percentage point range centered on 3.0% but is currently will above that at 6.2%. That bank’s statement of explanation notes
Oil prices remain volatile. The possible impact of severe El Niño conditions on agricultural prices pose further upside risks to inflation. Potential wage adjustments also warrant close monitoring, including their implications for broader price setting and second-round effects. These underlying price risks require preemptive monetary action. With today’s policy action, average headline inflation is still seen to breach the 4.0-percent tolerance ceiling in 2026 and 2027.
Copyright 2026, Larry Greenberg. All rights reserved.
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