The Bank of Korea (BoK) will hold its Monetary Policy Committee (MPC) meeting on Thursday, August 25 at 01:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of seven major banks.
At the last meeting on July 13, the bank hiked rates by 50 basis points (bps) to 2.25%, as expected. Now, the BoK is expected to hike their rate by 25 bps to 2.50%.
ANZ
“We expect the BoK to hike by 25 bps. Overall, we maintain that the BoK’s rate hiking cycle will end in 2022; we have pencilled in 25 bps hikes at each of its remaining three policy meetings (August, October and November) this year, bringing the policy rate to 3.0%.”
Standard Chartered
“We expect the BoK to hike the base rate by 25 bps to 2.50%. The central bank is likely to take a balanced approach to monetary policy as the base rate has reached the bottom of the range of neutral rate estimates and global recessionary concerns rise. Korea’s CPI inflation rose to 6.3% YoY in July, suggesting that inflationary pressure remains and that inflation is yet to peak. However, on MoM basis, CPI inflation eased to 0.5%. The BoK is likely to view this positively and therefore hike by 25 bps in August.”
ING
“We expect the BoK to raise rates by 25 bps. On the same day, the BoK will release its latest economic outlook. The 2022 GDP outlook could be downgraded slightly to 2.6% from the current 2.7%, while the CPI inflation outlook should rise sharply to 5.3% from 4.5%. Surveys for consumers and businesses are also likely to worsen as the recent nationwide floods will likely take a toll on sentiment.”
UOB
“On the assumption that inflation will peak in 2H22, we maintain our forecast for the BoK to revert to 25 bps hike for the remaining meetings this year in Aug, Oct and Nov to bring the benchmark base rate to 3.00% by year-end. With an expected moderation in inflation rate next year, the BoK is likely to stay on hold thereafter, or even begin to trim interest rate should growth risks mount.”
TDS
“Headline inflation climbed to 6.3% YoY in July from 6.0%, reaching a 24-year high and likely warrants another hike from the BoK. However, the Governor has signalled a preference for more ‘gradual’ 25 bps hikes instead of another outsized 50 bps hike last month. The Board still views the policy rate as accommodative and we think the BoK isn't done with its tightening cycle yet.”
BBH
“BoK is expected to hike rates 25 bps to 2.5%. The swaps market is pricing in 50 bps of tightening over the next six months that would see the policy rate peak near 2.75% but we see upside risks.”
Credit Suisse
“We now think that the BoK will slow down its hikes. We expect 25 bps hikes at each of the four upcoming meetings (25 August, 12 October, 24 November and next January) to be followed with a pause for the remainder of 2023.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.