VIEW: J.P.Morgan Now Look For 50bp Hike In October

J.P.Morgan note that they “now expect that the BoK will hike the policy rate by 50bp at its October meeting, preventing an “excessively wide” policy interest rate differential with the U.S. as a few members (we believe Cho, Senior Deputy Governor, Park, and Suh, in the August or the July meeting) mentioned in the meetings, as per the minutes. With the expected follow-up 25bp hikes in November, January and February 2023, the BoK’s policy rate should reach a terminal rate of 3.75%. The near-term risk to this forecast is a downside surprise in the September CPI print and/or sudden stabilization of the nominal effective exchange rate’s depreciation trend, which may cause the BoK to stick to the existing forward guidance of 25bp step hikes.”