Citi Lowers Possibility of Additional Rate Hike in October, Maintains 3.75% Risk

After the Bank of Korea raised its base rate to 3.00% per annum, Citi analyzed that the possibility of an additional hike in October has decreased. However, it stated that the risk of the final rate rising to 3.75% per annum still exists. Citi's economist, Kim Jin-wook, evaluated the interest rate path following the 0.25 percentage point hike by the Bank of Korea's Monetary Policy Committee, citing comments from Governor Shin Hyun-sung and the monetary policy direction statement. The maintenance of the existing forward guidance in the monetary policy direction statement was also mentioned as a reason for lowering the possibility of an additional hike. The Bank of Korea's six-month dot plot indicated that the median forecast for the base rate has risen to 3.25% per annum. Economist Kim emphasized that since the rate has reached 3.00%, the Monetary Policy Committee members should assess the impact on various sectors of the economy. Citi maintains its basic forecast for the final rate at 3.50%, noting that the semiconductor market and domestic recovery have boosted growth prospects, but inflationary pressures remain. The Bank of Korea has projected this year's real GDP growth rate at 3.3% and next year's at 2.9%. The decision on further hikes will be discussed at the monetary policy direction meetings on October 22 and November 26.

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