BNP Paribas Raises Bank of Korea Terminal Rate Forecast to 3.25% from 3.00% [fn Market Watch]
- Input
- 2026-07-17 08:00:00
- Updated
- 2026-07-17 08:00:00
It also assessed that inflation has become a bigger policy priority than growth, lifting the expected terminal rate by another step. 25%.
The revision came as recent economic data continued to beat expectations and inflation pressures appeared likely to last longer than initially expected. The 25-basis-point rate hike at the July Monetary Policy Board meeting matched market expectations, but BNP Paribas said it did not interpret Governor Shin Hyun-song’s message at the subsequent press conference as merely neutral.
While the remarks left room for a slower pace of tightening, the bank said comments emphasizing price stability still carried a hawkish signal. As a base case, BNP Paribas now expects additional rate hikes in October this year and January next year.
It also said an alternative scenario remains possible, in which the central bank raises rates in August and November this year if inflation stays stronger than expected. Meanwhile, the investment banking industry says the significance of this outlook lies not just in the timing of the next hike, but in the upward revision of the peak rate itself.
The view suggests that the Bank of Korea will place greater policy weight on inflation stability than on slowing growth for the time being. An industry source said, "Attention is also focused on how expectations for additional tightening this year will affect government bond yields, the won, and investor sentiment toward financial stocks.
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25%. The bank said the move reflects its view that recent economic indicators and inflation trends make it more likely that tightening will not end with the latest hike.
25%. The bank said the move reflects its view that recent economic indicators and inflation trends make it more likely that tightening will not end with the latest hike.
[email protected] Kim Kyung-a Reporter