Nomura says the Bank of Korea’s unanimous October hold was expected and a
November rate hike remains its base case. The BOK will likely raise its growth
and inflation forecasts in November, but Nomura judges the bank’s policy
guidance is more hawkish than its economic outlook. Limited interventions help
explain the BOK’s cautious stance. Weak household income and consumption have
left MPC members divided over inflation persistence and the need for further
tightening. Nomura keeps a 3.50% terminal rate forecast and projects 25bp hikes
in Nov 2026 and Feb 2027. Sluggish household purchasing power and a stronger won
may cap inflation; November’s forecasts and the dot plot will test market
support for a higher peak.
