Meritz Securities Forecasts South Korea's Central Bank to Raise Rates in October

According to Meritz Securities analyst Lee Seung-hun, South Korea's central bank (BOK) will likely adjust rates in October, differing from past consecutive hike cycles, the researcher said on July 21. The analyst argued that while South Korea's economy is performing well on the back of semiconductor-driven exports, current financial stability and credit conditions do not warrant the urgent, back-to-back rate increases seen in previous cycles.

Lee noted that apartment price increases are concentrated in Seoul and the capital region, falling short of the overheating levels recorded in 2021. Private loan growth stood at 3.9% as of June, below nominal GDP growth in double digits, indicating lower pressure on household debt ratios. The BOK is scheduled to release preliminary Q2 real GDP figures on July 23.