MNI BoK Preview - April 2022: Touch & Go

EXECUTIVE SUMMARY

• The sell-side is split when it comes to the prospect of action from the BoK at its April meeting, with those that are calling for a 25bp rate hike nowhere near certain that such a move will come to fruition (11/21 in the BBG survey look for a hike). We are also non-committal, with no meaningful bias in either direction. BoK Senior Deputy Governor Lee has noted that this meeting will be “tricky,” pointing squarely at the combination of higher inflationary risks and downward pressure on economic growth.
• Further tightening will come, with well-documented inflationary pressures evident. Headline CPI moved to the highest level observed since the early 2010s in March, atop 4%.
• We also note that BoK Governor-in-waiting Rhee Chang-yong has not yet received parliamentary approval, which may present an operational case for delaying the next round of tightening.
• Whatever the decision, the tight nature of the call should prevent a unanimous round of voting on the part of board members, with most of the sell-side still looking for a gradual pace of hikes in ’22. We also note that BoK dove, Joo Sang-yong, will chair Thursday’s meeting and handle the post-meeting press conference. This could provide a dovish tinge to the post-statement communique, given his leanings.
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