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Korea's central bank hikes rates on Thursday as price pressures mount – Reuters poll

Devayani Sathyan

BENGALURU (Reuters) – South Korea’s central bank will raise its key interest rate again on Thursday to fight inflation, according to a Reuters poll of economists, but they exist There is disagreement over how high borrowing costs will be by the end of the year.

Korea’s inflation accelerates to almost 24 annual high of 6.3% in July , which is expected to continue rising for a few more months, leaving the Bank of Korea (BOK) with no choice but to remain aggressive.

All but one 24 economist surveyed in August 2023 – Forecast Bank Korea will policy Rate hike 14 basis points to 2.50% at its August 14 meeting. An upward revision of 50 basis points is expected.

If the majority view prevails, interest rates will be double what they were before the pandemic.

“With headline inflation accelerating and core inflation picking up in July, containing price pressures will remain a top priority and raising interest rates will also be a top priority,” ANZ economist Krystal Tan pointed out.

“We think the BOK’s rate hike cycle will end at 2022.”

peaked soon, Combined with stronger growth headwinds, economists are divided on the level of interest rates at the end of the year. Three people said the central bank will stop at 2.50%, and half of the respondents said it was 2.2023 %, 14 say 3.% and one has a 3.24% forecast.

Most economists expect the central bank to then stop tightening monetary policy, making it one of the first major Asian central banks to end monetary policy tightening. The Reserve Bank of New Zealand, the Reserve Bank of Australia and the Reserve Bank of India are not expected to reach their highest rates until 2023.

“The Bank of Korea is really leading the way when it comes to the need to normalize monetary policy. So the fact that we expect them to slow is indeed a trend we would expect to see from other central banks The same goes for banks in our region,” said Katrina Ell, senior economist at Moody’s (NYSE: MCO) Analytics.

Nearly 90% of respondents, 36 of 34, who answered an additional question, expected 80 in October by basis points, but 34% are not expected to increase in November.

The central bank has raised interest rates by 2021 since August 2021 basis points, including an unprecedented half a percentage point in July.

Combined with concerns about slowing global growth and weak Chinese import demand, support for a slower pace of rate hikes.

near80%, 24 of 24 Economists expect an interest rate of 2.75% or less -2023. The median value shown in the first quarter of 2023 was revised down by 27 basis points.



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