[Anchor]

The Bank of Korea, which has maintained a tightening stance, paused rate hikes this month. However, concerns that high interest rates will be prolonged sent the Kospi plunging by more than 3.5%.

Reporter Kim Hye-min has the details.

[Reporter]

As expected by the market, the Bank of Korea kept its base rate frozen at 3.0 percent.

All seven members of the Monetary Policy Board voted in favor of the freeze.

Previously, the Monetary Policy Board cut rates four times from October 2024 through May of last year, before raising rates consecutively in July and August of this year.

During the rate hike in August, Bank of Korea Governor Shin Hyun-song emphasized preemptive action, stating, "We blocked with a hoe what we would have otherwise had to block with a shovel," and explained that "today's freeze is the fruit of that hoe work."

He noted that the bank has gained room to maneuver, allowing it to implement policies tailored to domestic economic conditions without being pressured by external circumstances.

However, he also hinted at the possibility of additional rate hikes coming in November or early next year.

[Shin Hyun-song / Bank of Korea Governor: Given that growth momentum and inflationary pressure are showing aspects even stronger than in August, I believe it is necessary to continue our current restrictive policy stance.]

The Kospi suffered a steep decline, dragged down by forecasts that the rate-hiking stance will continue, along with growing questions over AI profitability.

Samsung Electronics dropped 4% and SK Hynix fell 5.4%, causing the index to close down 3.52% at 5,533.

Tech companies across Asian markets weakened following news that Meta did not provide investment outlooks for next year when releasing its third-quarter earnings, while the market was also impacted by profit-taking after recent surges in the 5% range.

[Lee Jin-woo / Head of Research, Meritz Securities: We saw a sharp decline led by the Hang Seng Tech Index and others. Our market moved in tandem and showed a downturn. Because our market has a particularly large weighting in semiconductors and the influence of foreign capital flows has become much higher than before, it had the effect of making the shock to the market appear larger.]

Earnings reports from Microsoft and Amazon due next week, alongside specific shareholder return plans from SK Hynix and Samsung Electronics, are expected to serve as short-term turning points.

(Video by: Shin Jin-soo | Video Editing by: Ahn Ye-jin | Graphics by: Park Tae-young)