BlockBeats News, July 14th - According to foreign media surveys, economists expect the Bank of Korea to implement its first rate hike in over three years on Thursday, with another hike expected before the end of the year. South Korea's June inflation rate rose to 3.2%, hitting a two-and-a-half-year high and staying above the Bank of Korea's 2% target for the fourth consecutive month. It is expected that the average inflation rate in the second half of this year will be around 3%, paving the way for the start of a tightening cycle. Strong economic growth, rising housing prices, and high household debt have provided policymakers with room to tighten policy.

South Korea's first-quarter economy grew at its fastest pace in nearly six years. Bank of Korea Governor Lee Ju-yeol stated that due to the surge in oil prices triggered by the Middle East conflict, inflation is expected to remain above the Bank of Korea's target for a significant period, necessitating a rate hike. In a survey conducted from July 7th to 13th, 36 of the 37 economists surveyed expect the Bank of Korea to raise the base rate to 2.75% on July 16th, with one outlier. The majority of the economists surveyed (28 out of 31) expect another rate hike by the end of the fourth quarter, bringing the policy rate to 3.00%. One economist predicts the base rate to reach 3.25%, while the remaining two forecast it to stay at 2.75%. The median forecast indicates that the Bank of Korea will raise the base rate to 3.25% in the first quarter of 2027 and maintain this level at least until the end of next year, representing a 25 basis points increase from the May survey.