Key insights
- Citi anticipates a potential rate hike by the Bank of Korea due to upward revisions in 2026 GDP and CPI forecasts. While this directly impacts the Korean economy, tighter global monetary conditions can indirectly create headwinds for US equities, albeit marginally, through reduced global demand and potentially higher borrowing costs.
Investing.com - Citi said it cannot fully rule out the possibility of a preemptive rate hike by the Bank of Korea at its May 28 monetary policy board meeting, citing potential upward revisions to the central bank’s 2026 economic forecasts.
The firm said it now assumes the median of the forward six-month conditional policy rate would be revised up to 2.75%-3.00% from a previous 2.50%. Citi had previously believed the earliest signal for a rate hike could emerge at the May 28 meeting through a hawkish adjustment in the forward six-month conditional policy rate projection by Bank of Korea monetary policy board members.
Citi said the Bank of Korea’s 2026 GDP growth forecast will likely be revised up to 2.4%-2.6% from a previous 2.0%, driven by a strong first-quarter 2026 GDP print and fiscal stimulus measures.
The firm said the Bank of Korea’s 2026 CPI inflation forecast will likely be revised up to 2.6%-2.8% from a previous 2.2%. The previous forecast had assumed a 2026 Brent oil price of $64 per barrel and a negative output gap.
Citi’s assessment comes as the Bank of Korea prepares to update its economic projections at the upcoming monetary policy board meeting.
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