Hike Delivered, CPI View Marked Higher, Non-Committal On Next Hike

The BoK delivered the widely expected 25bp hike to interest rates today, marking up its '21 & '22 CPI forecasts in the process as it flagged inflation running above target for a considerable time, although its initial '23 CPI forecast sees a move back below the 2.0% goal. Joo Sangyong provided the expected dovish dissenting vote (also dissented when the Bank hiked rates in Aug). BoK Governor Lee reiterated the idea that the policy rate remains accommodative, running below its estimates of the neutral rate, while its forward guidance on the appropriate adjustment of accommodation was maintained. There may have been a sense of disappointment as Governor Lee didn't pre-commit to another hike in Q122, although he didn't rule out such a move and stressed that there was no reason to keep the policy rate exceptionally low, while noting that the Bank would communicate if a big gap between market expectations and the BoK's train of thought appeared. The BoK left its '21 & '22 GDP growth forecasts as they were, while pointing to a positive output gap in H121.

• The lack of explicit pre-commitment on the timing of further rate hikes has seemingly weighed a little on bond yields, with bull steepening in play in the KGB space as a result.