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VIEW: Goldman: July Meeting Is A Close Call

BOK

Goldman Sachs note that “markets continue to price in aggressive BoK rate hikes for the remainder of this year (140bp over coming 6 months). We continue to expect a 25bp hike in July, followed by three more 25bp hikes over the remainder of this year, although the size of the move at the upcoming meeting is a close call given a high inflation print in June. Should an unprecedented hike in a "big step" (50bp) take place in July, it is unlikely to be repeated, given limited upside room to policy rates of 100-125bp by end-2022 as seen by the BoK, increasingly fragile growth momentum amid weakening global demand for Asian exports, potentially destabilizing impact of repeated large hikes on Korea's highly leveraged private sector, and uncertain near-term effects of rate hikes on externally driven inflation. Our MPC view has both upside and upside risks, with the former coming from a more hawkish Fed than now and the latter from easing commodity prices along with a rapid slowdown in global growth.”

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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