SOUTH KOREA: Bank of Korea meets Thursday, with BOK Gov Lee chairing the
meeting for the final time before his term expires at the end of March.
RBC Capital Market strategists says consensus sees the BOK remaining on
hold at 2.0% “in large part, reflecting the view that government
opposition to any move will prove decisive.” Nevertheless, Lee told
legislators a few weeks ago that a rate hike is “not far away,” the
strategists remind. Governor Lee appears to be a “hawk in a cage” in
recent months, voicing concern about potentially rising inflation to
come as well household debt, property prices and “risks associated with
keeping rates low for too long.” Lee’s replacement may find it hard to
raise rates in the first few months of his/her term, which suggests that
Gov Lee may try to convince other MPC members that tightening now is
appropriate. “If Governor Lee is really a hawk, tomorrow will be his
last chance to escape the cage,” RBCCM says.