The Bank of Korea (BoK) meets this week and the decision whether to hike or not looks to be finely-balanced. We expect the policy rate to be unchanged at 2.0%, although the chance of a July move is significant. The policy rate is extremely low, the economic recovery is unlikely to come under serious threat in coming quarters, and inflation is set to rise. In addition, government opposition to BoK rate hikes has now subsided.
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