South Korea's central bank has reiterated that its policy interest rate needs to be raised at an appropriate time, further reinforcing its hawkish stance. This comes just a week before policymakers convene to decide whether to resume monetary tightening.

A report submitted to the National Assembly on Thursday indicated the central bank believes this shift reflects that factors such as strengthening economic growth, inflation running above target, and rising financial stability risks are increasingly making it unsuitable to keep borrowing costs unchanged.

This report echoes the hawkish pivot the bank has made since May. At that time, it raised its 2026 economic growth forecast to 2.6% and suggested that factors including inflation, growth, exchange rates, and financial imbalances were increasingly pointing towards the same policy direction. The market widely expects the Bank of Korea to raise its benchmark interest rate to 2.75% at its meeting on July 16th.