Moody's Analytics said in a report that the Bank of Korea is expected to raise the benchmark interest rate by 25 basis points to 2.75% this week. The agency believes that the July rate hike will be the beginning of a gradual tightening cycle. The agency said inflation is well above target levels and will only fall when energy prices fall back. The weakening of the Korean won, another surge in household debt, and rising housing prices in Seoul have strengthened the reasons for raising interest rates. The agency added that in a context where semiconductor exports drive economic prosperity and growth, the monetary policy committee has every reason to raise interest rates. The Bank of Korea's interest rate setting meeting is scheduled for Thursday.

Moody's Analytics said in a report that the Bank of Korea is expected to raise the benchmark interest rate by 25 basis points to 2.75% this week. The agency believes that the July rate hike will be the beginning of a gradual tightening cycle. The agency said inflation is well above target levels and will only fall when energy prices fall back. The weakening of the Korean won, another surge in household debt, and rising housing prices in Seoul have strengthened the reasons for raising interest rates. The agency added that in a context where semiconductor exports drive economic prosperity and growth, the monetary policy committee has every reason to raise interest rates. The Bank of Korea's interest rate setting meeting is scheduled for Thursday.