Korea’s Q3 GDP, published overnight, surprised on the upside yet again. The economy is unlikely to grow so strongly in coming quarters but continued recovery is not in doubt. The Bank of Korea’s policy rate now looks too low at 2.0% and we expect that a sustained policy tightening will start in November. Furthermore, given recent hints from Governor Lee that rates will not move in “baby steps”, we expect a 50bp first hike.
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