South Korea’s 10-year government bond yield fell to around 3.51%, its lowest level since mid-January, pressured by reductions in bond issuance, which pushed bond prices higher. The announcement revealed a cut of at least 6 trillion won in Q1 government and bank bond sales to ease pressure on yields and guide market rates lower. Meanwhile, the Bank of Korea held its benchmark interest rate steady and signaled no near-term policy changes. Under a newly introduced forward-guidance framework, the BOK’s median forecast for the policy rate in six months remained at 2.5%, reflecting a neutral stance after January’s removal of references to potential rate cuts. The central bank also raised its 2026 growth forecast to 2% from 1.8% and lifted its inflation outlook to 2.2% from 2.1%. Governor Rhee Chang-yong also added that consumption recovery is expected to continue, while exports, led by the chip sector, are likely to accelerate, reducing the need for additional stimulus.
