South Korea's Central Bank Expected to Hike Rates by 25 Basis Points on July 16

According to Crédit Agricole's chief economist Kim Yeon-jin, South Korea's central bank is expected to unanimously raise its benchmark rate by 25 basis points in tomorrow's monetary policy meeting on July 16. The rate hike reflects first-quarter GDP growth exceeding market expectations, strong recent export trends, and consumer price increases surpassing 3% in both May and June. Additional pressures include won-versus-dollar depreciation pushing import prices up approximately 25% year-on-year, rising energy costs, and climbing livestock prices. Household loans also surged to 9.3 trillion won in May and 8.3 trillion won in June, compared to 3.5 trillion won in prior months, while real estate prices continued rising in the Seoul metropolitan area despite ongoing lending restrictions.

Credit Agricole forecasts a potential additional rate hike in October and expects the won to stabilize as tighter monetary policy supports the currency.