BOJ Rate Hike Expectations Grow as Board Member Signals Hawkish Stance 
ECB Warns Euro Zone Inflation Will Keep Rising Despite Strait of Hormuz Reopening 
ECB Signals Possible Rate Hike as Middle East Tensions Push Euro Zone Inflation Higher 
Kevin Warsh Advances Toward Fed Chair Role Amid Political Tensions 
Huawei Chip Breakthrough Sparks Rally in Chinese Semiconductor Stocks 
Oil Prices Jump as U.S. Strikes in Iran Raise Fears Over Strait of Hormuz Supply Disruptions 
Dollar Weakens as Iran Peace Hopes Lift EUR/USD and Risk Sentiment 
Trump Faces Pressure as Fed Chair Kevin Warsh Takes Over 
Oil Prices Slide as U.S.-Iran Talks Raise Hopes for Strait of Hormuz Reopening 
Japan Falls to Third-Largest Global Creditor as China Overtakes in 2025 
Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
European Airline Stocks Rise as Oil Prices Drop on U.S.-Iran Strait of Hormuz Deal Hopes 
Wall Street Faces Inflation Pressure as Strong Earnings Season Nears End 
AI-Driven Memory Chip Prices May Be Skewing U.S. Inflation Data, Fed Minutes Suggest 
Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns 
European Stocks Rise as U.S.-Iran Peace Deal Hopes Lift Market Sentiment 
South Korea’s central bank is widely expected to leave its benchmark interest rate unchanged this week, but growing inflation concerns linked to the Iran conflict and rising oil prices are increasing expectations for future rate hikes.
According to a Reuters poll conducted between May 19 and May 25, 30 out of 32 economists forecast the Bank of Korea (BOK) will maintain its key policy rate at 2.50% during its May 28 policy review. Only two analysts predicted an immediate increase.
However, market sentiment has shifted sharply toward tighter monetary policy later this year. More than 70% of economists surveyed expect at least one interest rate hike by the end of September 2026. In the previous Reuters survey, only a small number of economists anticipated a rate increase.
The change in outlook comes as South Korea’s inflation rate climbed to 2.6% in April, exceeding the BOK’s 2.0% target and reaching its highest level in nearly two years. Rising global oil prices, fueled by ongoing Middle East tensions and the Iran war, have kept crude prices above $100 per barrel for several months, increasing inflationary pressure across Asia.
Analysts also noted that the weakening Korean won is contributing to higher imported inflation, especially for energy-related goods. Economists believe these factors could push the BOK toward tightening monetary policy sooner than expected.
At the same time, South Korea’s economy continues to show resilience. The country recorded a stronger-than-expected 1.7% economic expansion in the first quarter of 2026, supported by strong semiconductor exports and stable domestic demand.
Economists now expect the Bank of Korea to revise its 2026 GDP growth forecast higher than the previous 2.0% estimate. Many analysts believe stronger economic growth gives the central bank enough room to consider rate hikes later this year and into 2026.
Among economists surveyed, most expect the BOK’s base rate to reach 3.00% by the end of 2026, reflecting expectations that inflation and economic growth will remain elevated.
