BofA economists say markets largely price a 25bp Bank of Korea hike on July 16,
but the central bank’s commentary on won weakness may matter more than the rate
move itself. Persistent won depreciation is keeping elevated inflation despite
lower oil and repeated official warnings; overseas equity outflows and FX
volatility strengthens the case for further policy normalization, though BofA
does not treat back-to-back hikes as its base case. Investors will watch for
whether the Bank of Korea signals greater concern about rising house prices and
leveraged-ETF trading as financial stability risks.
