FX.co ★ South Korea’s 10Y Yield Rises After BoK Decision

South Korea’s 10-year government bond yield climbed to around 4.16% in late May, approaching its highest level since November 2023, after the central bank left interest rates unchanged but adopted a more hawkish tone. The Bank of Korea raised its inflation forecast for 2024 to 2.7%, up from 2.2% in February, citing higher energy prices following supply disruptions related to the Iran conflict. At the same time, policymakers upgraded their 2026 growth projection to 2.6% from 2.0%, reflecting stronger-than-expected first-quarter GDP, supported by surging global demand for semiconductors powered by artificial intelligence. In this context, the central bank’s dot plot for policy rates six months ahead signaled a marked hawkish shift, with two members indicating rates could reach 3.25% in risk scenarios. Most projections clustered around 3.0%, implying expectations of roughly two additional rate hikes over the next six months.