Tentative Rate Hikes To Come

Despite keeping rates on hold at its June meeting, the Bank of Korea (BoK) moderated the dovish tone it has taken through early 2010 and instead noted the underlying strength of the South Korean economy. The economic woes of Europe will likely ensure South Korea's monetary authorities act cautiously in normalising monetary policy, but nevertheless we believe that the BoK intends instigate an initial rate hike in Q310 to pre-empt inflationary pressures.

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