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S. Korean Inflation Cools Slightly in Oct
3 Nov
Summary
- South Korea's headline inflation slowed to 2.8% in October.
- Inflation remains above the central bank's 2.0% target.
- The Bank of Korea is expected to raise interest rates soon.
In October, South Korea experienced a slight decrease in its headline inflation rate, which slowed to 2.8% year-on-year. This figure is down from September's 2.9% and closely matched economists' forecasts. The monthly consumer price index also saw a modest increase of 0.2%.
Despite this slowdown, the inflation rate remains notably above the Bank of Korea's target of 2.0%. Central bankers are facing persistent inflationary pressures, exacerbated by elevated global energy prices and increasing household debt.
Consequently, the Bank of Korea is widely expected to maintain its tight monetary stance. This includes anticipated interest rate hikes in the upcoming months to further stabilize the economy.
Market consensus suggests the peak policy interest rate could reach 3.50%. This outlook incorporates expectations of at least one more rate hike in November and another in the first quarter of 2027.
