BoK Likely to Raise Key Rates

The Bank of Korea, the country’s central bank, is almost certain to raise its benchmark lending rate in July given the recent subdued inflation, economists and leading investment banks said, Reuters reported. While the bank’s governor Lee Ju-yeol recently clarified the BoK accommodation should be eased when “various conditions match up”, they are weighing on the continued “under-controlled” inflation as the primary reason to phase out the rate hike timing from the second quarter of this year to the third quarter. “One more rate hike is expected in the third quarter of this year as inflation pressures will remain contained,” Morgan Stanley, a leading investment bank, said in its research note, Monday. One economist at another US-based investment bank operating in Seoul was more outspoken by weighing the probability of a July rate increase with 25 basis points to 1.75%. He declined to be identified as he isn’t authorized to officially speak to the media. But the July possibility is in accordance with the bank’s internal schedules not from the result of “third-party” external factors. BoK said it “should raise” its rate when it becomes possible to do so.