South Korea's Central Bank Likely to Raise Rates in October, Not August, Based on Stable Inflation Expectations at 2.7%

According to Barclays economist Son Beom-gi, on July 29, South Korea's central bank is likely to raise its benchmark rate in October rather than August. The analysis is based on July's Consumer Sentiment Index (CSI), which shows consumer confidence improved modestly but household spending did not increase. Meanwhile, inflation expectations for the next 12 months declined to 2.7%, down 0.1 percentage point month-over-month.

Recent stock market declines pose an additional risk to consumer spending. Household assets are estimated to have declined approximately 80 trillion Korean won due to the KOSPI index adjustment, potentially further weakening consumption psychology in the near term.