[Exane] The Bank of Korea (BOK) raised its policy rate by 25 bp to 2.25%, after keeping a record low rate for 16 consecutive months.
The timing of the hike is somewhat earlier than what the consensus forecasted (3Q10).
Key takeaways from the statement and the press conference:
- First, the rate hike should not be seen as the beginning of aggressive tightening. The statement notes that monetary accommodation should continue.
- Second, BoK will not surprise the markets and will keep sending signals before further hikes. Inflation, labor markets, property markets and the global economy as key factors to consider.
Conclusion:
This is the start of a gradual and moderate withdrawal of monetary accommodation.
Bank Negara Malaysia (“BN”) raised its overnight policy rate by another 25bps to 2.75%, its third increase for the year.