Korea: BoK starts hike cycle as expected; what comes next?

Research evidence excerpt

Korea: BoK starts hike cycle as expected; what comes next?

J P M O R G A N Asia Pacific Economic Research

16 July 2026

Korea: BoK starts hike cycle as

expected; what comes next?

Emerging Markets Asia, Economic

and Policy Research

Seok Gil Park

(82-2) 758-5509

seok.g.park@jpmchase.com

JPMorgan Chase Bank, N.A., Seoul Branch

As signaled at the May MPC meeting, the Bank of Korea raised its policy rate by

25bp at today’s July meeting, marking a shift from an easing cycle to a tightening

cycle after a 13-month pause. In terms of forward guidance, however, the meeting

offered relatively few quantifiable signals. There was no dot plot, no dissenting

vote, and while the policy statement was hawkish, its degree of hawkishness was

broadly in line with expectations. That said, the Governor’s remarks suggested that

every meeting over the coming months should be treated as live, with policy

decisions calibrated in response to incoming data. On balance, we read the press

conference as leaving the probability of an August hike slightly higher than that of

a pause.

As noted above, the Governor’s press conference carried more weight than usual

at this meeting, given the absence of other forward-guidance tools. In response to

a question on the possibility of an August hike, the Governor gave what appeared

to be a carefully prepared answer. He emphasized that Korea’s growth momentum

remains relatively strong compared with major economies, and that there is

consensus within the MPC that, if income growth materializes more strongly,

policymakers need to pay close attention to potential demand-side inflation

pressures.

This communication suggests that, if next week’s 2Q GDP release and the early-

August July CPI data confirm the recent trend, an August hike would be firmly on

the table.