The Bank of Korea may shift to gradual tightening as the strengthened Korean won provides policy cushion

(1) Capital Economics economist Gareth Leather pointed out that after the central bank of South Korea raised rates for the second consecutive time in August (to 3.00%), it may shift to a more gradual policy tightening path in the coming months. (2) As the Korean won strengthens, the pressure for further rate hikes by the central bank will decrease, and exchange rate factors provide some buffer for monetary policy. (3) The South Korean economy is strong enough to absorb the impact of this rate hike, so there is no significant risk of economic slowdown caused by tightening in the short term.