Economist at UOB Group Ho Woei Chen, CFA, comments on the potential move on rates by the Bank of Korea later in the month.
Key Takeaways
“South Korea’s headline and core inflation continued to climb in Apr. The headline CPI was above 4% for the second straight month at 4.8% y/y, 0.7% m/m (Bloomberg est: 4.4% y/y, 0.4% m/m) from 4.1y/y, 0.7% m/m in Mar, the highest since Oct 2008.”
“A back-to-back 25 bps interest rate hike to 1.75% on 26 May is fairly likely given the near-term inflationary pressures since there will not be an MPC meeting in June and the following meeting will only be in July. Minutes of the Apr meeting highlighted concerns over wage-price spiral and the near-term focus on taming runaway inflation risks versus supporting growth.”
“BoK will be updating its growth and inflation forecasts at the May meeting. Despite the high level of external uncertainty, South Korea’s economy is likely to remain on track to reach a 2.7% GDP growth this year.”
