FX.co ★ South Korea 10Y Yield Climbs to 1-½ Year High

South Korea's 10-year government bond yield has surged to approximately 3.47%, marking its highest level since June 2024. This increase follows the central bank's decision to maintain its key interest rate, effectively signaling the end of the current easing cycle. The priority for policymakers is now financial stability, especially as the won remains near its lowest value in sixteen years. Since October 2024, there has been a total reduction of 100 basis points in rate cuts. However, Governor Rhee Chang-yong has indicated that the current geopolitical uncertainties and ongoing risks of capital outflow necessitate a prolonged pause in easing measures. The Bank of Korea has underscored this position by removing any indication from its statements that future rate cuts might occur. Consequently, analysts have revised their forecasts, predicting the next rate cut will occur in the first quarter of 2027, rather than in the first quarter of this year as previously expected. This adjustment reflects ongoing governmental efforts to stabilize the won amid challenging external economic conditions.