Five of nine economists in a combined AJP and Aju Business Daily survey expect the Monetary Policy Board to hold the benchmark rate at 2.75 percent on Thursday, while four forecast another 25-basis-point increase.
The split reflects competing views over whether stronger growth and financial-stability risks warrant another immediate hike, or whether softer headline inflation, a firmer won and the need to assess the impact of July's increase give the BOK room to wait.
South Korea's gross domestic product expanded 0.6 percent from the previous quarter and 3.7 percent from a year earlier in the second quarter.
The BOK is expected to raise its 2026 growth forecast to above 3 percent from the 2.6 percent projected in May, largely reflecting prolonged strength in semiconductor exports. The revised economic outlook will be released Thursday after the rate decision.
At the same time, inflation has softened despite entrenched conflict in the Middle East.
Consumer price growth slowed to 2.8 percent in July from 3.2 percent in June, while the won strengthened into the 1,300-per-dollar range. Core inflation excluding food and energy, however, remained elevated at 2.6 percent.
The stronger won has also eased pressure from import prices.
"Semiconductor-led export strength is translating into double-digit nominal growth," said Yoon Yeo-sam, an economist at Meritz Securities.
Yoon also pointed to household debt and volatility in property and equity markets as financial-stability risks that could warrant further tightening. He expects the policy rate to reach as high as 3.25 percent by year-end.
Strong second-quarter GDP and gross domestic income, firmer core inflation and resilient semiconductor exports and current-account conditions also support front-loading further tightening, according to Cho Yong-gu of Shinyoung Securities, who forecasts a 25-basis-point increase this week.
Cho said the widening increase in non-mortgage borrowing, including overdraft credit, also supported an earlier move. Recent declines in stock prices and the won-dollar exchange rate were more likely to influence the eventual peak in rates than Thursday's decision, he said.
Cho expects the policy rate to reach 3.25 percent by year-end and the BOK to raise its 2026 growth forecast to around 3.3 percent while keeping its consumer inflation projection at 2.7 percent.
After two rapid increases, however, he expects the central bank to pause for at least one meeting to assess their impact on growth, inflation and financial stability.
Kim Jung-sik, an economist at Yonsei University, expects annual growth to exceed 3 percent on strong semiconductor exports and a large current-account surplus. But he sees that external strength as also supporting the won and easing imported inflation pressure.
Kim expects the policy rate to stand at 3.00 percent at year-end.
"An August hold would be closer to a pause to check the data before another hike than the end of the hiking cycle," said Kang In-soo, an economist at Sookmyung Women's University.
He expects the policy rate to finish 2026 at 3.00 percent and sees the BOK raising its growth forecast to around 3.0 percent while keeping its consumer inflation projection at 2.7 percent. Core inflation and the won-dollar exchange rate will be key variables for the next move, he said.
The bond-market turmoil triggered by a sharp selloff in U.S. Treasuries is also likely to weigh on the BOK's policy path.
The 10-year U.S. Treasury yield stood at 4.704 percent last Friday, up 53.71 basis points so far this year. South Korea's corresponding 10-year yield closed Friday at 4.376 percent, up 99.1 basis points over the same period. Japan's 10-year yield has risen 81.9 basis points.
The increase in Korean yields has therefore been substantially steeper than in either the United States or Japan, even though the BOK began its latest tightening later.
Thursday's meeting will also mark the first policy vote for newly appointed Senior Deputy Governor Kwon Min-soo, who sits on the seven-member board ex officio.
Kwon said in his inaugural remarks that stronger semiconductor activity had lifted growth beyond earlier expectations, while inflation, household debt, housing prices, currency volatility and geopolitical and trade risks still called for "cautious and flexible" policy decisions.
For markets, the vote split, the size of the BOK's growth upgrade and its guidance on the timing of the next move could prove as important as Thursday's rate decision itself.
AJP Takeaways:
- Five of nine economists in a combined AJP and Aju Business Daily survey expect the BOK to hold its benchmark rate at 2.75 percent on Aug. 27, while four forecast a 25-basis-point hike.
- Yoon Yeo-sam and Cho Yong-gu see the policy rate reaching 3.25 percent by year-end, bringing forward tightening they had expected in the first quarter of 2027 in AJP's July poll.
- Hike advocates point to stronger economic growth, persistent core inflation and credit risks, while the hold camp sees softer headline inflation and a firmer won as giving the BOK room to wait.
- Respondents in AJP's follow-up survey expect the BOK to raise its 2026 growth forecast to at least around 3 percent, with Yoon at 3.4 percent and Cho at 3.3 percent.
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