The Bank of Korea (BOK) kept its benchmark interest rate unchanged while significantly raising its inflation and growth forecasts. Policymakers are weighing rising price pressures from surging oil prices due to Middle East geopolitical tensions, the potential for sustained high wage growth from major memory chipmakers Samsung and SK Hynix as the AI storage boom accelerates and spills over, and uncertainties surrounding the broader economic expansion outlook.

On Thursday, the BOK maintained the seven-day repurchase rate at 2.5%, extending the pause in its monetary policy stance that began last July, following four rate cuts between October 2024 and May 2025. This decision was in line with the expectations of 22 out of 23 economists surveyed, with one economist forecasting a 25-basis-point hike amid strong wage growth.

The newly formed BOK Monetary Policy Board remains cautious about the growth outlook. The policy statement showed the central bank raised its inflation forecast for this year to 2.7% from 2.2% projected in February, reflecting persistently rising energy costs following the closure of the Strait of Hormuz due to the Iran conflict. The bank also raised its 2026 economic growth forecast to 2.6% from a previous estimate of 2.0%. Economists had anticipated significant upward revisions for both forecasts, and the new projections may fuel market speculation about a potential hawkish shift towards rate hikes.

This meeting was the first policy decision presided over by new Governor Shin Hyun-song and the first involving new board member Kim Jin-il, a former Federal Reserve economist widely viewed as more hawkish than his predecessor, Shin Sung-hwan. Governor Shin is scheduled to brief reporters later on Thursday, where he is expected to elaborate on the monetary policy outlook, the board's assessment of the strength of South Korea's memory semiconductor sector and its related significant wage expansion, and the domestic housing market.

The central bank will also release a statement containing voting details and the board members' interest rate projections for the next six months. "Inflation seems to have room to rise further, so the possibility of the BOK taking action in July is quite high," said Cho Yong-gu, a senior fixed-income strategist at Shinyoung Securities. "The BOK's economic outlook itself appears relatively reasonable without major surprises, so the focus may now shift to the interest rate projection dots, any dissenting votes in favor of a hike, and the governor's qualitative comments on guidance." Cho added that if a rate hike proposal receives two dissenting votes, markets could quickly start pricing in expectations for a July hike.

"Both growth and inflation expectations were raised significantly, indicating a shift in the policy trade-off: from supporting growth to containing inflation. This further supports our view that the BOK is preparing for a monetary tightening cycle," said economist Kwon Hyo-sung from Bloomberg Economics.

**Massive Chipmaker Bonuses Ignite New Inflation Fuse: AI Boom Shows Signs of Spillover, BOK May Be Forced to Abandon Rate Cut Narrative**

South Korea's unprecedented memory chip boom, driven by the AI supercycle, is spilling over from corporate earnings into macroeconomic and financial variables. While the BOK's decision on May 28 to keep the benchmark rate at 2.50% was in line with mainstream expectations, it faces pressures from rising oil prices, the won, real estate, and resurgent wage inflation. South Korea's consumer price index rose 2.6% year-on-year in April, up from 2.2% in March. Exports surged 48% year-on-year, driven by semiconductors, consumer electronics, and ships, indicating the economy is not experiencing typical "weak-demand stagflation" but a complex mix of "memory chip-driven growth strengthening alongside energy and asset price-driven inflation."

As AI agent tools like Anthropic's Claude Cowork and OpenClaw, capable of autonomous task execution, are set to proliferate around 2026, this wave of AI agents is sweeping the globe. The bottleneck in AI computing architecture is shifting from GPUs centered on matrix multiplication throughput to "full-stack AI systems driven by AI agents." In this shift of the AI narrative, data center CPUs and memory chips could be the biggest beneficiaries. In other words, the AI computing bull market is expanding from "computing systems around AI GPU/ASIC chips" to central processors and the "data storage foundation."

Amid this so-called "memory chip supercycle" driven by unprecedented AI infrastructure investment, South Korea's two memory chip giants, Samsung Electronics and SK Hynix—super-heavyweights that together account for nearly 50% of the Kospi Composite Index—are the strongest engines attracting global capital and the core driver behind the South Korean stock market's record highs and outperformance. The Kospi has surged approximately 100% year-to-date in 2026, surpassing its wild 76% gain from last year when it led global markets. Notably, it achieved this in less than six months of 2026.

The wage dynamics at Samsung and SK Hynix could be a key trigger for South Korea's inflation chain. Samsung's chip division reached an agreement with its union: all chip employees will receive a regular cash bonus equivalent to 50% of their annual salary, plus a special bonus pool set at 10.5% of the semiconductor business's operating profit, distributed in stock. For example, a memory chip employee with a base annual salary of 80 million won could receive total bonuses of around 626 million won this year.

Meanwhile, SK Hynix has previously removed its bonus cap and pledged to allocate a full 10% of its annual operating profit to a performance bonus pool for the next decade. Reuters estimates that if its operating profit reaches 250 trillion won this year, employee bonuses could exceed 700 million won.

The macroeconomic risk is that these massive profit-linked bonuses could reinforce the BOK's hawkish constraints through three channels: First, the cash and salable stock boost household liquidity, which is more likely to flow into stocks and real estate than general consumption. Second, increased home-buying capacity among high-income chip engineers could amplify multiplier effects on down payments, mortgages, and asset-based borrowing. Third, the profit-sharing mechanisms at SK Hynix and Samsung are becoming benchmarks for wage negotiations across South Korean industries. Unions at companies like Samsung Biologics, LG U+, and Kakao have already submitted profit-sharing demands ranging from 10% to 30%, suggesting the "AI dividend" from the semiconductor sector could spread into broader wage rigidity and service sector inflation pressures.