A July 7-13 survey of 37 economists shows the Bank of Korea is expected to
deliver its first policy-rate increase in more than three years on Thursday,
July 16, raising the benchmark to 2.75% (36 of 37 respondents). June CPI rose to
3.2% YoY, a two-and-a-half-year high and the fourth month above the BOK’s 2%
target; respondents expect H2 inflation to average about 3%, supporting a
tightening cycle. Strong Q1 growth (near six-year highs), rising house prices
and elevated household debt were cited as creating scope for rate increases.
Governor Shin said higher oil prices linked to the Middle East conflict will
keep inflation above target for some time, making a rate hike necessary. In a
subset of 31 respondents, 28 expect an additional hike by end-Q4 taking the rate
to 3.00%; one expects 3.25% and two expect rates to remain at 2.75%. The survey
median projects the policy rate at 3.25% in Q1 2027 and held at least through
end-2027, 25bps above the May survey.
