Korea BOK Signals Rate Hikes

The Bank of Korea maintained its policy rate at 2.50% but delivered a hawkish surprise, leading Crédit Agricole CIB to forecast 25bp hikes in July and October 2026.

Key Takeaways

• 1.The BOK kept its policy rate at 2.50% but signaled future hikes through a hawkish forward guidance and two dissenting votes.
• 2.Macroeconomic forecasts for GDP and CPI in 2026 and 2027 were revised upward, driven by the semiconductor cycle and supply/demand inflationary pressures.
• 3.Crédit Agricole CIB expects 25bp rate hikes in both July and October 2026, with potential for a terminal rate at or above 3.50%.

Table of Contents

• BOK likely to start hiking in July
• Dissenters and upward revisions to GDP and CPI forecasts
• Six-month forward guidance turned much more hawkish
• Clear rate hike signal and higher room for terminal rate
• We continue to expect the BOK to start rate hikes in July
• Prefer medium-term KTBs
• Stay short EUR/KRW
• Emerging Markets Research advanced tools
• Red Mount Analytics

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