VIEW: Goldman Roll Forward Hike Call

Wednesday saw Goldman Sachs note that “rising prospects of an early adoption of a supplementary pandemic handout package, together with stabilisation in the pandemic situation (albeit with lingering risks of a surge in Omicron), raise the odds of a BoK rate hike in the MPC meeting next week, a back-to-back hike that would be somewhat earlier than implied by gradual orderly normalisation. The BoK Governor has recently sent hawkish signals, notably in his New Year address, against the backdrop of elevated inflation, milder than expected weakness in activity in December and a more hawkish tilt by the Fed. We accordingly revise our view for the timing of the next hike - which would be the third since the August 2021 liftoff - to January from April, although it is a close call. That said, we maintain our view that monetary policy normalization in Korea will likely proceed more gradually thereafter, with the following hike most likely occurring in August, albeit with a caveat of unusually high uncertainties stemming from the upcoming presidential election.”