Nomura Sees Bank Of Korea Increasing 2022 Inflation Forecast, May Prompt Hawkish Stance

On CNBC, Jeong Woo Park of Nomura said that South Korea’s economic growth is expected to be balanced, with the recent GDP data showing improvement from the previous quarters.

The country’s central bank was concerned about higher inflation levels at the January meeting, with the inflation rate in the country expected to remain above the bank’s 2% target.

The Bank of Korea is likely to increase inflation expectations at its meeting next month, which might prompt the BOK to take a hawkish stance on monetary policy.

However, Park is expecting growth concerns to come back, which will challenge a hawkish approach in the coming period.

For the full-year 2021, South Korea’s economy grew at the fastest pace in eleven years at 4%, amid strong exports demand. The country’s annual GDP growth rate came in at 4.1% in the fourth quarter, higher than analysts’ expectations of a 3.7% expansion.

Private consumption surged 6.3% last quarter, up from 3.3% in the previous quarter, while government consumption surged 8.1% on an annual basis versus the earlier quarter.

Price Action: South Korea’s KOSPI Composite Index dropped 2.56% to close at 2,720.39 on Tuesday.