The Bank of Korea (BoK) left its policy rate unchanged today, as expected. Mortgage lending curbs are tackling property bubble concerns and core inflation will likely trend lower. Korea’s GDP recovery should be sustained and strong but a fiscal tightening is imminent and will keep the BoK cautious. Accordingly, our central view remains that a first hike will come in early 2010. The chance of an earlier move remains significant. But regardless of when the first move comes, the bigger picture is that policy rates will likely move up in 2010 by less than what the markets currently expect.