Overview
- The Monetary Policy Board is expected to lift the base rate by 25 basis points to 2.75% at its meeting on Thursday, which would end an eight-meeting pause that began in 2023.
- Consumer prices accelerated to 3.2% in June, remaining above the BOK’s 2% target for a fourth straight month and giving officials a clear reason to act.
- The won’s weakness, trading above 1,500 per dollar and briefly near 1,550, has raised import costs and added pressure on monetary policy decisions.
- Record exports led by semiconductors have boosted growth and given the bank room to tighten, while household debt and rising house prices remain domestic risks to watch.
- Markets and economist polls show near-unanimous expectation of the July move and a majority forecast one more hike this year toward 3.0%, so investors will watch the BOK’s guidance on timing and pace.