Deutsche Bank Korea Macro Insights: Why the Bank of Korea Can Stay Patient
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Key Views
- The first coordinated US-Japan FX intervention since 1998 drove the won stronger than initially expected; recent nonfarm payrolls data further weakened the dollar, with the won up about 9% from around 1,550 in early July.
- July headline inflation unexpectedly eased to 2.8% (June: 3.2%), reinforcing the case for patience.
- Core inflation momentum is rising, reflecting a continued domestic-demand recovery, keeping Deutsche Bank's October hike call intact.
Outlook
Deutsche Bank maintains its forecast that the BOK will hike in October. Risks remain skewed to the upside, as the BOK may revise up its growth outlook, moving closer to Deutsche Bank's projection.
Recommended Securities
None specified in the report.