J.P.Morgan note that “in all, the Governor and the MPC statement provided a clear signal to preemptively respond to prevent inflation being anchored materially above the target, yet with specific forward guidance for gradual (25bp) increases of the policy rate in the follow-up meetings. Such straightforward communication decreased the uncertainties around the monetary policy decisions going forward, yet we believe that risks to timing and magnitude of further policy rate hikes still remain due to lingering uncertainty (or upside risks) in inflation path. That is, the forward guidance was based on an underlying assumption that inflation path should not materially deviate from the BoK’s (currently internal) projection, thus core prices’ trend growth remains a key to watch. As a reference point, we currently assume about 0.3% M/M, sa monthly gain in core goods and service prices in H222, slowing down from 0.7% monthly gain in private service prices and 0.5% in non-oil goods prices in Q2 averages.”
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