Citi warns the Bank of Korea could pre‑emptively raise rates at the May 28 meeting, targeting a 2.75‑3.00% policy rate.
The central bank may lift its 2026 GDP growth outlook to 2.4‑2.6% from 2.0% after a strong first‑quarter print and fiscal stimulus.
Inflation expectations are also revised upward, with the 2026 CPI forecast raised to 2.6‑2.8% from 2.2%, reflecting higher oil price assumptions.
These upward revisions increase the probability of a hawkish stance, potentially tightening liquidity and affecting Korean equity and bond markets short‑term.