A deputy governor of the Bank of Korea said there is a very high chance of additional interest rate hikes to address lingering inflationary pressures, stressing that policy must be preemptive and proactive. While no timing or magnitude of the hike was specified, the signal was clear after last month's meeting, which delivered the first rate increase in three and a half years. The central bank is more concerned about demand-driven inflation than supply-side impacts from Middle East conflicts. The latest data showed the July consumer price index rose 2.8 percent year-on-year, slowing from 3.2 percent in June, while core inflation rose 2.6 percent, the largest increase since December 2023.
BOK signals further rate hikes, pushing yields up.
BOK rate hike signal strengthens KRW.
