The Bank of Korea unanimously voted to raise interest rates by 75 basis points in November, raising the policy rate to 3.25%.
At that time, two key factors were worth noting. First, the governor of the central bank clarified that 3 of the 7 members thought the terminal interest rate was 3.5%, another 2 thought it might be higher than 3.5%, and 1 thought it was at 3.25%, but Refusing to disclose their preferred level. In addition, the policy statement noted that the Bank of Korea sees continued interest rate hikes as necessary for a period of time.
These factors suggest that the Bank of Korea is leaning toward at least one more rate hike based on current evidence. Between now and the gap between the policy meeting in January next year, you need to pay attention to:
1. How market expectations for the policy path and the dollar will evolve;
2. How commodity prices change;
3. Logistics and wage growth in South Korea.
