Assessing Rate Hike Pressures For Japan And South Korea

This report examines interest rate hike pressures in Japan and South Korea, arguing that both central banks maintain rates that are too low relative to inflation and FX performance. ING analysts suggest significant cumulative rate hikes are required in both nations to stabilize currencies and align with macroeconomic conditions.

Key Takeaways

• 1.Official interest rates in both Japan and South Korea are currently too low given inflationary pressures and currency weakness.
• 2.The Bank of Japan should consider a 25bp hike, while the Bank of Korea faces pressure for approximately 100bp in cumulative hikes.

Table of Contents

• Assessing rate hike pressures for Japan and South Korea
• Rate Pressures for Japan
• Our interest rate pressure model
• Rate Pressures for South Korea

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