South Korea: BoK hikes by 25 bps – UOB

Pablo Piovano FXStreet

Economist at UOB Group Ho Woei Chen comments on the latest interest rate decision by the Bank of Korea (BoK).

Key Takeaways

“Bank of Korea (BoK) reverted to a smaller rate hike in Nov as it raised the benchmark base rate by 25bps to 3.25%, dialing down from 50bps hike in Oct. This is due to a less hawkish Fed, credit market stress, higher growth risks and a more stable KRW.”

“The BoK kept its 2022 GDP growth forecast at 2.6% but sharply downgraded its forecast for 2023 to 1.7% from 2.1%.”

“The central bank also marginally lowered its CPI inflation forecasts by 0.1% point for both 2022 and 2023 to 5.1% and 3.6% respectively. However, the inflation is expected to remain elevated at the 5% level in the near-term.”

“This is BoK’s final meeting for 2022 and the next meeting will be on 13 Jan 23 where we now expect the central bank to hike for a final 25bps to 3.50% before staying on pause throughout 2023.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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