Economists overwhelmingly expect no change at Thursday’s meeting, but inflation and growth data fuel rate hike expectations by September.
The Bank of Korea is set to maintain its base rate at 2.50% during its May 28 meeting, aligning with expectations from 30 of 32 economists polled. Only two economists forecast an immediate increase, reflecting caution amid rising inflation pressures.
Inflation hit 2.6% in April, the highest in nearly two years, breaching the central bank’s 2.0% target. Oil prices above $100 a barrel and a weakening won have intensified imported inflation concerns. Meanwhile, Q1 GDP growth accelerated to 1.7%, the fastest pace in six years, prompting expectations for an upward revision to the full-year growth forecast.
A Reuters poll shows 21 of 29 economists now predict at least one rate hike by end-September, a sharp shift from last month’s outlook. Markets are closely watching for signals on the timing of future tightening as inflation expectations continue to rise.