Second straight interest-rate hike for Asia’s No. 3 economy as Nvidia-led AI expansion continues

**Article Body**

The Bank of Korea has once again tightened monetary policy, raising its benchmark interest rate by 25 basis points to 3%. This second consecutive hike comes alongside an upgraded outlook for the domestic economy, a clear signal that policymakers view current growth conditions as strong enough to absorb the cost of more restrictive borrowing.

The catalyst for this unusual pairing of higher rates and higher forecasts is the accelerating artificial intelligence boom. As Asia’s third-largest economy, South Korea’s export sector is heavily intertwined with the global semiconductor supply chain. Consequently, the sustained demand for AI infrastructure—underscored by Nvidia’s recent quarterly results—is injecting fresh momentum into the local economy, despite lingering global headwinds.

For markets, the relevance lies in the central bank’s shifting focus. Having prioritized the fight against inflation, the Bank of Korea now appears confident that economic expansion can withstand further tightening. The key watchpoint will be how long this AI-driven growth cycle sustains itself, as the durability of this export demand is likely to be the deciding factor in the central bank’s next policy moves.