All 10 economics and securities experts expect a rate hold this month

All 10 domestic and international economics and securities experts expected the Bank of Korea to keep its benchmark interest rate at 3% per annum this month. In the survey conducted ahead of the Monetary Policy Board meeting on the 22nd, five respondents expected a unanimous decision, with every board member supporting a hold.

The experts' main reason for expecting a hold was the need for time to assess how the previous two rate increases had affected inflation and the economy. They anticipated a 'hawkish hold': leaving the rate unchanged at this meeting while maintaining a stance of raising rates to address inflation.

However, nine of the 10 experts thought the Bank of Korea could raise rates in November. The experts judged that even if rates were held steady this month, it would be difficult to regard that as an end to monetary tightening.

Inflation was the main reason behind the assessment that further increases were needed. Consumer price inflation fell to 2.9% in September from 3.1% the previous month, but remained above the Bank of Korea's 2% inflation target. Core inflation excluding food and energy, which is less affected by temporary price fluctuations, was also 2.8%.

Eight of the 10 experts forecast an ultimate benchmark rate of 3.50% per annum, while the other two expected 3.25–3.50% per annum. The respondents thus saw room for a further increase of 0.25–0.50 percentage points from the current level.

Ahn Ye-ha, an analyst at Kiwoom Securities, explained that the duration of the artificial intelligence (AI) investment cycle would be a major variable shaping the future path of the benchmark rate. She also offered a conditional forecast that high interest rates could persist if the growth trend remained intact.