Asia Week Ahead: Chart of the week: 25 - 29 May

Research evidence excerpt

Asia Week Ahead: Chart of the week: 25 - 29 May

Deutsche Bank

Research

Economics Date

Asia Week Ahead 25 May 2026

Chart of the week: 25 - 29 May

Juliana Lee

Week Ahead Chief Economist

South Korea's growth momentum in both domestic and external demand +65-6423-5203

accelerated in Q1, with trade activity remaining robust through Q2 despite the oil

shock. Meanwhile, although Gangnam housing inflation has eased, sharply higher Kaushik Das

Chief Economist stock prices point to a sustained improvement in household financial balance +91-22-7180-4909

sheets at the aggregate level, although distribution remains an issue. CPI inflation

is likely to reach 3% in May—data due on 2 June—and rise further through the Yi Xiong, Ph.D.

summer. A hike as early as 28 May cannot be ruled out entirely, but we think it will Chief Economist

+852-2203-6139 not be delivered until July. First, the 28 May meeting is Governor Shin’s first

Monetary Policy Board meeting, and the local election is just around the corner Junjie Huang

on 3 June. Even if there is no dissenting vote, Governor Shin’s press conference Economist

will point to a hawkish shift in the BoK policy bias, but one carefully calibrated to +65-6423-6699

curb market pricing, which appears excessive. We reiterate our expectation of a

Deyun Ou rate hike in July and another in Q4 this year. Another area of market interest will Economist

be the BoK’s growth and inflation forecasts, which are likely to be revised up to +852-2203-6166

the mid-2% range for both, from 2% and 1.8%, respectively—albeit still below our

own forecasts of 2.7% growth and 2.8% inflation. A weaker Korean won adds

further inflationary pressure, thereby posing greater risks to our rates outlook.

Figure 1: Korea Inflation (red) and policy (blue) outlook

GMTGMT