Week in review
- U.S. PCE inflation rose to 3.8% y/y in Apr
- China YTD industrial profits rose to 18.2% y/y in Apr
- Bank of Korea kept policy rates unchanged at 2.50%
Week ahead
- U.S. May JOLTs and jobs report
- Japan April wage growth
- Korea May trade and inflation rates
Thought of the week
The BoK delivered a remarkably hawkish meeting last week. Although the Base Rate was expectedly kept at 2.50%, all communication channels have pointed to imminent tightening in the near term. The voting pattern showed two members dissenting for a rate hike; the median six-month-forward dot plot was revised up from 2.50% to 3.00%; forecasts on both growth and inflation were upgraded; forward guidance shifted towards a decision on hike timing; and Governor Shin further reinforced the “clear hiking path” at press conference. And this seismic shift on monetary policy stance is largely a reflection of several dynamics – a sustained tech upcycle, renewed reacceleration in Seoul housing prices (underpinned by a prolonged undersupply), growing fiscal spending via supplementary budgets (with upside funded by AI-led corporate tax revenue), and increasing signs of second-round inflation pressures. While the near-term energy-driven inflation shock may prove transitory, the evidence points to higher, faster, and longer-lasting rates in Korea, with markets even pricing a terminal rate above 3.50%.
Korea policy rate and market implied pricing
Base Rate, onshore KRW vs 91-day CD
Source: Bloomberg, Bank of Korea, J.P. Morgan Asset Management. Data reflect most recently available as of 29/05/2026.
Market data
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