Seoul: The Bank of Korea (BOK) is anticipated to keep the benchmark interest rate steady at its upcoming monetary policy meeting for the eighth consecutive session, as the central bank faces rising inflation and stronger-than-expected economic growth, analysts suggested on Tuesday. BOK Governor Shin Hyun-song will oversee the Monetary Policy Board meeting on Thursday, marking his first rate-setting assembly since assuming office last month.

According to Yonhap News Agency, the central bank has maintained the benchmark rate at 2.5 percent over seven consecutive meetings since May of the previous year. A recent survey of six economists by Yonhap indicated unanimous expectations for the BOK to leave rates unchanged during the upcoming meeting, citing ongoing uncertainties due to the Middle East conflict.

Jang Min, a senior researcher at the Korean Institute of Finance, mentioned the likelihood of a "wait-and-see" approach by the Monetary Policy Board, given external factors driving inflation. Despite holding rates steady, the central bank may later reassess the inflation trajectory.

Economists agreed that, regardless of the decision to keep the benchmark interest rate steady, the BOK is expected to signal a more hawkish stance, suggesting a potential future rate hike. Analysts highlighted the growing pressure on the central bank to tighten monetary policy as the prolonged Middle East conflict contributes to inflationary pressures and a weakened Korean won.

Predictions indicate that consumer prices could rise to around 3 percent in May, driven by increasing international oil prices and the weaker won. In April, South Korea's consumer prices grew 2.6 percent year-on-year, marking the fastest increase in nearly two years. While weak domestic demand remains a barrier to raising interest rates, robust semiconductor-driven exports bolster expectations that curbing inflation has become a greater policy priority.

Asia's fourth-largest economy experienced a 1.7 percent expansion in the first quarter compared to the previous quarter, marking the strongest quarterly growth in over five years due to strong semiconductor exports. Recent statements from BOK officials have reinforced market expectations for a more hawkish policy direction.

Ryoo Sang-dai, the BOK's senior deputy governor, recently suggested considering a rate hike due to stronger-than-anticipated economic growth. Kim Jinill, a new BOK board member, also advocated for higher interest rates in his inaugural remarks, emphasizing the need to prevent a potential financial crisis.

Ahn Ye-ha, a senior researcher at Kiwoom Securities Co., believes the central bank will likely indicate openness to a rate hike, given the domestic economy's better-than-expected performance. "The key focus of this meeting will be the message regarding the future policy path, rather than the decision to keep rates unchanged," Ahn added.