Pause Possible In February But Not A Done Deal

A key sentence in today's BoK statement, "The Board deems it warranted to maintain the restrictive policy stance with an emphasis on ensuring price stability, as inflation is expected to remain high above the target level, although the domestic economic growth rate has slowed." clearly hints at the possibility of a pause, particularly when compared to Nov statement. "The Board sees continued rate hikes as warranted for some time, as inflation is expected to remain high, substantially above the target level, although the domestic economic growth rate has slowed."

• Still, the BoK board appears somewhat divided. Two members dissented today's move, while 3 see the current rate, after today's decision, at 3.50% as favorable from a terminal rate perspective. In contrast, 3 board members see 3.75% as a possible terminal rate.
• BoK Governor Rhee came across as slightly more in the hawkish camp, stating today's BoK statement doesn't mean rates will be kept frozen. He also pushed back against the idea of rate cuts later this, stating it would be difficult to deliver unless they see evidence of inflation reaching 2%.
• Between now and the next meeting is on 23rd of February. Between now and then the BoK will get Q4 GDP (25th Jan) which is expected to be negative, while Jan CPI prints on the first of Feb. The central bank may also have a better picture of how China growth/external demand is emerging in the early parts of 2023 by then, along with the Fed path.