South Korea July inflation +2.8% y/y, weaker than expected

One board member noted that the current rate increase alone might not be sufficient to bring inflation back to target, suggesting further hikes would be necessary. The minutes indicated that the pace of future increases should be determined by reassessing growth and inflation projections, weighing the costs and benefits of preemptive versus gradual approaches. Another member stressed the importance of consolidating the trend toward price stability through preemptive monetary policy.

Policymakers remain wary of upward inflation pressures stemming from various factors, including cost and demand-side pressures, economic activity improvements, foreign exchange rates, household debt, energy supply chains, and liquidity in asset markets. The central bank had previously raised interest rates for the first time in 3.5 years at its July meeting.