Bank of Korea set to tighten again

We expect Korea’s central bank to hike the base rate by 25bp for the second meeting in a row on Friday, which would take the policy rate to 3.0%. This is also the consensus view. Core inflation, which excludes food and fuel, has surged while GDP growth is likely to pick up during the course of this year. We now forecast that monetary tightening will be speeded up, with the policy rate reaching 4.0% by year-end.

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