The Bank of Korea (BoK) lifted its policy rate by 25bp to 2.75% today, which was in line with our forecast but surprised the consensus. Policymakers have rightly become more focused on inflation and we expect that rates will move up further, with the next hike coming in March or April. However, below-trend GDP growth this year and what is likely to be an ongoing appreciation trend for the won suggests to us that the policy rate need not rise to the peak the markets currently anticipate.