Global investment bank (IB) Morgan Stanley said that Korea's growth rate is slowing, and predicted the Bank of Korea's final interest rate at 3.25%.
Morgan Stanley published a report on the global and Asian economic outlook on the 14th (Korean time) and said, "Korea's growth rate will be low in the first half of next year due to fiscal tightening and worsening export conditions." As it increases, the growth rate will return closer to the trend line.”
Morgan Stanley predicted that "low growth rate will act as downward pressure on inflation" and that "headline inflation will drop below 5.0% from March next year, approaching the Bank of Korea's target of 2% by the end of next year."
Accordingly, Morgan Stanley predicted that the Bank of Korea would keep the final rate at 3.25% after the November hike in this rate hike cycle.
The base rate in Korea is currently 3.00%.
"We believe we are nearing the end of a rate hike cycle," Morgan Stanley said in a statement.
“Considering the slowing growth rate, the Bank of Korea is likely to start cutting interest rates in December next year,” he added.
Morgan Stanley also added that if the won depreciates further as the US Federal Reserve strengthens its hawkish stance, the Bank of Korea may continue the cycle of rate hikes until early next year.