VIEW: J.P.Morgan Make Hawkish Adjustment To BoK View

J.P.Morgan note that the forward guidance in the BoK’s April meeting minutes was “more hawkish than we assumed after the meeting, and the minutes bolstered the risk case of higher terminal rate than our previous expectation. Looking back at the MPC communications in the previous few meetings and minutes, the MPC’s standing-pat decision in February was likely a one-off pause due to geopolitical uncertainty, instead of suggesting the pace of hikes going forward in the near-term. That is, we now believe that the BoK’s intention is back-to-back hikes for now to lift the real policy rate up, unless unexpected events disrupt the economic outlook and financial market volatility.”

• “In all, we add 25bp hikes in May and Q3, which would mean the BoK’s policy rate reaches 2.50% by end-2022 (vs. 2.00% in our previous forecast with once-per-quarter hikes) with 2.75% our new terminal rate (vs. 2.25% previously). In our monthly profile, we now expect 25bp hikes at the May, July, August and October meetings, with a January 2023 hike to conclude the hike cycle at 2.75% in our current assessment.”