Bank of Korea (BOK) kept its benchmark 7-day repo rate unchanged at 3.50% for the fifth consecutive meeting in Aug, in line with consensus and our expectations. The rate decision was unanimous and the BOK also retained its hawkish stance due to concerns that inflation will rebound and household loans growth has re-accelerated.  

Similar to the previous meeting in Jul, all the six board members remained open to a further 25-bps hike to bring the terminal rate to 3.75% but their opinions on a rate hike by end-2023 differed. 

The BOK maintained its 2023 GDP growth and headline CPI forecasts at 1.4% and 3.5% respectively but raised the core CPI forecast to 3.4% from 3.3%. For 2024, the central bank slightly lowered its growth forecast to 2.2% from 2.3% and kept its inflation outlook unchanged at 2.4%. 

We expect the BOK to remain on hold for the rest of 2023. There are two more meetings for the rest of this year on 19 Oct and 30 Nov.