Nomura expects the Bank of Korea to stand pat in 2026 and face an increasing risk of raising interest rates.

Nomura has expressed that the Bank of Korea has ended its rate-cutting cycle, and may maintain interest rates unchanged in 2026. With the momentum of economic growth strengthening, the risk of the next policy direction has shifted towards interest rate hikes. Nomura economist Jeong Woo Park stated that this shift reflects market expectations for South Korea's economy to expand at a pace higher than its potential growth next year, benefiting from strong domestic consumption, a recovery in the construction industry, and an upswing in the global semiconductor industry. He added that it is expected that by around the second quarter of next year, South Korea's economy will close the gap with potential output earlier than forecasted by the Bank of Korea, reducing the need for further relaxation of policies.