South Korea's central bank kept its policy rate unchanged at 2.5% for its second straight meeting to assess housing prices in the capital further, after prices had spiked earlier in the year.

The move was also in line with expectations of economists polled by Reuters.

The Bank of Korea said that inflation was stable and economic growth had shown "modest improvement," but warned that housing prices in Seoul and its surrounding areas, along with household debt, needed closer monitoring.

The central bank said household loan growth has slowed sharply, but expectations for higher home prices remain strong.

The BOK also upgraded its inflation forecast for 2025 to 2% from its May forecast of 1.9%, while the GDP growth forecast for the year was also revised to 0.9% from 0.8% previously.

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