Bank of Japan and Bank of Korea Face About 100 Basis Points of Rate Hike Pressure, Says ING on July 10

According to ING Bank, on July 10, both the Bank of Japan and Bank of Korea are each facing approximately 100 basis points of rate hike pressure to align current benchmark rates with economic conditions. Using its rate pressure model, ING calculated Japan's rate buffer at negative 18 basis points and South Korea's at negative 1.2%, indicating both nations' policy rates are too accommodative.

ING forecasts Japan's benchmark rate should reach around 2% from the current 1%, while South Korea's should rise to 3.5% from 2.5%. For Japan, currency weakness and inflation risks—potentially rising to 2.5%-3% as government subsidies fade—support tighter policy. South Korea faces similar pressures from won weakness and solid economic growth at 3.8% GDP and 3.2% inflation, though bond markets show greater confidence in future rate hikes.