The Bank of Korea's policy decision this week could come down to the wire, with a majority of economists anticipating a second consecutive rate hike to address stronger-than-expected economic growth and persistent underlying inflation.

A survey of 22 economists shows 14 expect the central bank to raise its benchmark rate by 25 basis points to 3% on Thursday, while 8 forecast a hold. Some domestic media polls suggest an even wider divergence of views among forecasters.

The central bank delivered its first rate increase since January 2023 in July, signaling that further moves would depend on inflation, economic growth, and financial stability conditions. In this context, the Bank of Korea will release updated projections, which are expected to lend additional support to a tightening bias.

Given exports and domestic demand have surpassed expectations, the 2026 growth forecast is likely to be revised significantly upward from the 2.6% projected in May. The state-run Korea Development Institute predicts the economy will expand 3.2% this year, while private-sector economists see even greater upside potential.

Inflation projections may also be lifted from the 2.7% estimate set in May, reflecting higher oil prices, a weaker currency since the start of the year, and signs that the semiconductor boom is filtering through to investment and consumption. That said, policymakers could point to the recent rebound in the Korean won as a reason to temper the urgency of an immediate hike.

Since the July meeting, the won has strengthened notably, breaking past the 1,400 level against the U.S. dollar and outperforming all Asian currencies this month. This rally should help curb imported inflation. As of writing, the won trades near 1,383 per dollar, close to its highest level in 11 months.

If the board opts to hold steady, investors may price in an October increase. Any dissenting votes favoring immediate action would reinforce such expectations, while a unanimous hold accompanied by a dot plot showing higher projected rates could indicate that policymakers agree on the need for further tightening but prefer a more gradual approach.

The six-month dot plot, set to be updated for the first time since May, will be closely scrutinized for signals on how much additional tightening may be required. The central bank's prior guidance has already tilted hawkish, with board member Shin Hyun Song noting that maintaining policy momentum is necessary given inflation running persistently above target, firm economic growth, and lingering financial stability risks.

Committee members have highlighted concerns over rising apartment prices in the Seoul metropolitan area, continued growth in household credit, and increasing leveraged equity investments. The government has proposed raising taxes on high-priced and investment properties as part of broader efforts to cool housing demand.

Minutes from the July meeting showed broad agreement among members that monetary policy should remain in tightening mode, with several officials stating that the timing and magnitude of further adjustments should be guided by incoming data.