Morgan Stanley said the base rate will likely be kept unchanged at 2.5% at the Bank of Korea's monetary policy committee meeting on the 26th.
According to the securities industry on the 16th, Morgan Stanley said in a recent report that the Bank of Korea is likely to raise its growth outlook while keeping its inflation outlook unchanged.
Citing a stronger-than-expected semiconductor supercycle, the report said the 2026 gross domestic product growth outlook could be revised up to 2%, 0.2 percentage points (P) higher than before, and the 2027 outlook could be raised to 2.1%. In contrast, it expected the inflation outlook to remain at 2.1% in 2026 and 2% in 2027.
On the rate path, it projected that five of the six Commissioners will favor holding for the next three months, with one calling for a cut. Morgan Stanley also maintained its view that a sharp shift in currency policy this year is unlikely. However, it noted that uncertainty in policy decisions could grow as the terms of three of the seven Monetary Policy Board members expire over the next six months. Governor Rhee Chang-yong's term ends in Apr., Commissioner Shin Seong-hwan's in May, and Vice Governor Yoo Sang-dae's in Aug.
Morgan Stanley added that recent comments from the Monetary Policy Board support its earlier view that the policy path will not change much for the time being. In particular, it said the departure of dovish Commissioner Shin could dilute the easing bias, and even if Vice Governor Yoo steps down, three of the remaining four may be relatively hawkish and optimistic on growth. It did not completely rule out the possibility that the three could be reappointed.