Bank of Korea set to hike again

The Bank of Korea (BoK) meets this week and we expect it to raise its base rate by 25bp to 2.50%. Monetary policy remains stimulatory and the BoK has grown increasingly concerned about rising price pressures. The economy also looks well-placed to expand at a steady pace, although probably slightly below trend, during the rest of this year and in 2011, despite what are likely to be tough external conditions and the relatively high domestic debt burden.