Incoming Bank of Korea Governor Shin Hyun-song brings formidable credentials and his appointment will reassure investors unsettled by high debt levels in Korea and the jump in property prices in Seoul. But when he takes the helm - shortly after April’s policy meeting – he will face a tricky policy trade-off. The government’s energy price caps won’t prevent inflation from rising over the coming months, whilst GDP growth is likely to slow. Our baseline forecast is that interest rates will be left unchanged at 2.50% for the rest of 2026, compared to our pre-war forecast for two 25bp cuts in the second half of the year.
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