Emerging Insight: Korea – 25bp July hike on the table, forward guidance key to watch

Research evidence excerpt

Emerging Insight: Korea – 25bp July hike on the table, forward guidance key to watch

Meanwhile, the reacceleration in Seoul housing prices is likely to reinforce the MPB’s

hawkish bias. Since May, Seoul home prices have risen by around 0.2% per week,

bringing year-to-date gains to over 5%, compared with a more modest 1.5% increase

nationwide (Exhibit 4). While the housing market rebound may not immediately translate

into stronger household leverage (given ongoing constraints on mortgage lending), it

remains a key source of domestic financial stability risk for the BoK. Together with the

growing use of leveraged ETFs by retail investors to gain exposure to domestic equities,

those domestic financial risks are likely to remain an important area of focus for

policymakers in assessing financial imbalances.

Exhibit 4: Housing prices in Seoul have been rising by more than 0.2% Exhibit 5: Retail sales accelerates as consumer sentiment remains

every week since May elevated

Weekly change in housing prices in Korea Consumer confidence and retail sales

% weekly change Seoul National Index % yoy Consumer sentiment index

0.5

120 Retail sales (RHS) 8

0.4

0.3 110

0.2 100

2 0.1

90 0 0.0

80 -2 -0.1

Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24 Jun-25 Dec-25 Jun-26 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26

Source: Haver, BofA Global Research Source: Haver, BofA Global Research

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Growth stays largely on track as external shocks ease

Separately, growth momentum remains relatively resilient so far, especially from the

external demand. Jun exports rose further by 70.9% yoy from 53.2% in May (see our June

trade comments), driven by strong tech exports including semi and computer offsetting

the weakness in non-tech exports.