Rhee: Need Clear Signs Inflation Is Under Control Before Pivot

Early Friday Comments from BoK Governor Rhee largely went over old ground, as he spoke with BBG.

• Most notably, Rhee noted that terminal rate of the current hiking cycle could be 3.50%, which would equate to one further 25bp hike.
• He also noted that he would reveal his preference for the terminal rate if there is a clear split on the matter within the BoK board (yesterday’s post-meeting remarks revealed terminal rate views of 3.25-3.75% on the Board), while noting that there needs to be strong signs that inflation is under control to facilitate a BoK pivot.
• Elsewhere, he flagged familiar sources of external focus for the BoK, as he highlighted the spill over from Fed policy on both the Korean economy and Korean asset prices.
• There was also some focus on the QT & deleveraging efforts seen abroad.
• Rhee also played down the idea of any systemic risk surrounding the Korean housing market.
• When it comes to the recent credit stress in the country, Rhee suggested that the banking and financial sectors were operating “fine,” outside of the real estate sector. Rhee also noted that the BoK is not looking to create an SPV to purchase commercial paper at present.
• He also pointed to a mistake by one Korean province as a trigger for the credit rout, with the BoK’s resultant actions being a result of worry that the rout could spread.