VIEW: Goldman Still Looking For One More Hike In ‘22

In the wake of yesterday’s BoK rate hike, Goldman Sachs note that “the acting Governor kept a hawkish stance on elevated inflation, but acknowledged policy focuses could shift if inflation does not accelerate further and downside risks to growth materialize. He echoed the previous Governor's remarks that BOK policy decisions should be based primarily on domestic macro conditions, rather than the pace of Fed rate hikes, noting that Korea is not in a stage in need of raising the policy rate above a neutral rate. Overall, we do not expect the MPC to pivot from a long-held gradual normalization stance to an accelerated hike mode as reflected in market prices. We keep our baseline scenario that the BOK will hike at a moderated pace, with one more hike in Q3 for remainder of the year, mostly likely July for now. An upcoming parliamentary hearing of the Governor nominee would provide more clarity on the timing.”