Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
BOK poised for rate hike Thursday as markets eye further tightening
Bank of Korea Gov. Shin Hyun-song speaks during a parliamentary session at the National Assembly in Seoul, Thursday. Yonhap
By Lee Hyo-jin
The Bank of Korea (BOK) is widely expected to raise its benchmark interest rate on Thursday, with markets focusing on whether the central bank will signal further tightening, analysts said Monday.
The BOK is anticipated to raise its policy rate by 0.25 percentage points, to 2.75 percent, at Thursday's Monetary Policy Board meeting, in what would mark its first rate increase since January 2023.
Markets are increasingly eyeing another 0.25 percentage point hike as early as August or October.
Citibank expects the central bank to raise rates unanimously this week.
"We expect the BOK to hike its policy rate by 25 basis points to 2.75 percent without a dissenting opinion. We expect Gov. Shin Hyun-song's press conference will likely point to a gradual pace of hiking cycle for the second half of 2026, implying a 25 basis points hike per quarter," Citibank economist Kim Jin-wook wrote in a report.
Citibank expects the BOK to continue its gradual tightening cycle, with additional 0.25 percentage point hikes in October, January and April in 2027, bringing the policy rate to a terminal rate of 3.5 percent.
Kim Ji-na, an analyst at Eugene Investment & Securities, also expects the BOK to unanimously approve a 25 basis point rate hike at Thursday's meeting.
"The rate hike itself has already been fully priced in, so the decision is unlikely to move markets significantly. The focus will instead be on how strongly the BOK signals another rate increase," she said.
Kim said investors will be closely watching Shin's assessment of whether inflationary pressures stemming from the Middle East conflict have begun to ease and when consumer prices are likely to peak.
But she added that the governor is unlikely to provide definitive guidance in July, with clearer signals expected at the BOK's August policy meeting when updated economic forecasts will be released.
In recent months, the BOK chief has repeatedly signaled that higher interest rates may be needed as inflation remains above the central bank's target.
Speaking at a National Assembly session on Thursday, Shin said the BOK would need to raise rates "at an appropriate time."
"Given that inflation remains above target, and considering improving economic growth and mounting financial stability risks, I believe it will be necessary to raise the base rate at an appropriate time," Shin said.