Societe Generale’s Kiyong Seong reviews the Bank of Korea’s 25bp hike to 2.75%, noting a unanimously hawkish Monetary Policy Committee. The July statement is assessed as more hawkish than May, and Governor Shin’s comments keep the option of a consecutive hike at the 27 August meeting open. Key upcoming GDP, GDI and inflation data are seen as crucial for the policy path.

Door open to consecutive tightening

"Our conclusion is that the BoK leaves the door open to the possibility of consecutive hike at the August meeting, although it will be data dependent."

"From Governor Shin's response to a question on the possibility of a back-to-back rate hike, we think the risk of another hike at the 27 August MPC meeting cannot be dismissed."

"In a nutshell, this sounded like an indirect signal that the BoK remains open to a back-to-back rate hike in August."

"Nevertheless, we suspect that receivers may be quicker than usual to take profits ahead of the upcoming key data releases, given the heightened sensitivity of the policy outlook to incoming growth and inflation data."

"July BoK MPC statement read more hawkish, signalling further hike ahead."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)