{"id":73405,"date":"2026-10-21T22:08:14","date_gmt":"2026-10-22T02:08:14","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/asian-markets-retreat-as-bank-of-korea-signals-persistent-inflation-risks\/73405\/"},"modified":"2026-10-21T22:08:14","modified_gmt":"2026-10-22T02:08:14","slug":"asian-markets-retreat-as-bank-of-korea-signals-persistent-inflation-risks","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/asian-markets-retreat-as-bank-of-korea-signals-persistent-inflation-risks\/73405\/","title":{"rendered":"Asian Markets Retreat as Bank of Korea Signals Persistent Inflation Risks"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Bank of Korea (BOK) holds the base rate at 3.00%<\/strong> in a unanimous decision, pausing after consecutive hikes in July and August to assess economic impact.<\/li>\n<li><strong>South Korea\u2019s KOSPI (<a href=\"\/stock\/KOSPI\">KOSPI<\/a>) fell 2%<\/strong>, while the <strong>Hang Seng Tech Index (<a href=\"\/stock\/HSTECH\">HSTECH<\/a>) shed over 3%<\/strong> amid a deepening sell-off in semiconductor and AI-related equities.<\/li>\n<li><strong>BOK sharply raised its 2026 growth and inflation forecasts<\/strong>, projecting GDP growth to &quot;significantly surpass&quot; previous estimates of 3.3% as export momentum remains robust.<\/li>\n<li><strong>The People\u2019s Bank of China (PBOC) injected 173 billion yuan<\/strong> into the banking system via overnight reverse repos, signaling a shift toward using overnight rates as a primary policy anchor.<\/li>\n<li><strong>Geopolitical tensions escalated<\/strong> as Moscow reported intercepting a massive wave of 630 drones, while Seoul urged Pyongyang to engage in dialogue to prevent military confrontation.<\/li>\n<\/ul>\n<p>The <strong>Bank of Korea (BOK)<\/strong> maintained its benchmark interest rate at <strong>3.00%<\/strong> on Thursday, opting for a strategic pause following back-to-back quarter-point increases. Despite the hold, Governor <strong>Shin Hyun-song<\/strong> delivered a hawkish outlook, warning that price pressures are likely to persist above the 2% target for an extended period. The central bank raised its 2026 inflation forecasts for CPI and Core CPI to levels exceeding the August estimates of <strong>2.3%<\/strong> and <strong>2.5%<\/strong>, respectively.<\/p>\n<p>Equity markets in the region faced severe selling pressure, particularly within the technology sector. The <strong>KOSPI (<a href=\"\/stock\/KOSPI\">KOSPI<\/a>)<\/strong> dropped <strong>2%<\/strong>, weighed down by heavyweights <strong>Samsung Electronics (<a href=\"\/stock\/005930\">005930<\/a>)<\/strong> and <strong>SK Hynix (<a href=\"\/stock\/000660\">000660<\/a>)<\/strong> as investors grew wary of a potential slowdown in AI infrastructure investment. In Hong Kong, the <strong>Hang Seng Tech Index (<a href=\"\/stock\/HSTECH\">HSTECH<\/a>)<\/strong> tumbled more than <strong>3%<\/strong>, hitting multi-month lows as concerns over semiconductor sector profitability and global liquidity conditions dampened risk appetite.<\/p>\n<p>In China, the <strong>People\u2019s Bank of China (PBOC)<\/strong> conducted a significant liquidity operation, pumping <strong>173 billion yuan ($24.3 billion)<\/strong> into the financial system through overnight reverse repos. This move aligns with recent statements from Governor <strong>Pan Gongsheng<\/strong> regarding a transition toward the overnight rate as the central bank\u2019s main policy benchmark. The injection aims to stabilize interbank rates and ensure ample liquidity as the market adjusts to a stronger-than-expected <strong>4.5% GDP growth<\/strong> reported for the third quarter.<\/p>\n<p>Geopolitical risks continue to cloud the global economic outlook. Moscow Mayor <strong>Sergei Sobyanin<\/strong> announced that Russian air defenses shot down the majority of <strong>630 drones<\/strong> targeting the capital overnight, marking one of the largest aerial assaults of the conflict. Meanwhile, on the Korean Peninsula, <strong>Seoul<\/strong> issued a formal call for <strong>Pyongyang<\/strong> to return to the negotiating table, citing the urgent need to avoid &quot;unintended military confrontations&quot; amid rising regional instability.<\/p>\n<p>In South America, <strong>Colombia<\/strong> announced a major cabinet reshuffle. President <strong>Abelardo De la Espriella<\/strong> named <strong>Alejandro Ord\u00f3\u00f1ez<\/strong>, the current ambassador to the OEA, to succeed <strong>Rodrigo Lara Restrepo<\/strong> as Interior Minister. The shake-up comes at a critical juncture for the administration as it seeks to navigate legislative challenges and maintain political stability. Justice Minister <strong>Iv\u00e1n Cancino<\/strong> will serve as interim Interior Minister until Ord\u00f3\u00f1ez officially assumes the role.<\/p>\n<p>Cybersecurity concerns also hit the headlines in Japan, where the <strong>Ministry of Finance<\/strong> temporarily restricted website content and services. The move was part of a broader national effort urged by Prime Minister <strong>Sanae Takaichi<\/strong> to patch critical vulnerabilities in the <strong>PHP programming language<\/strong>. The security measures resulted in several government and corporate websites going offline to prevent potential remote code execution attacks by malicious actors.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Bank of Korea (BOK) holds the base rate at 3.00% in a unanimous decision, pausing after consecutive hikes 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