The Bank of Korea (BoK) decided unanimously to raise its policy rate by 25 bps. Economists at ANZ Bank expect the BoK to deliver another 25 bps hike in October and November.

BoK signals more hikes despite rising growth risks

“The BoK’s decision today to hike its policy rate by 25 bps to 2.50% was unanimous and widely expected. It marked a slowing pace of tightening following the BoK’s 50 bps rate hike in July and reflected the central bank’s desire to continue addressing inflation risks, while balancing increased downside risks to growth.

“Importantly, the BoK signalled that more rate hikes are needed, as inflation pressures and expectations remain high.”

“We are sticking with our baseline scenario for a terminal policy rate of 3.0%, which pencils in a 25 bps rate hike at each of the central bank’s two remaining policy meetings this year.”