By Devayani Sathyan and Tushar Goenka
BENGALURU (Reuters) - The Bank of Korea will leave rates on hold on Thursday after back-to-back hikes at the previous two meetings, according to economists in a Reuters poll who said elevated inflation would lead it to resume raising borrowing costs next quarter.
Consumer price inflation in Asia's fourth-largest economy jumped to a near-decade high of 3.6% in January, remaining above the central bank's 2% target for a 10th month.
To tame those price pressures, as well as to curb rampant house price growth and surging household debt, the BOK has raised interest rates three times since August last year.
The Feb. 15-21 poll showed all but one of 28 economists expected the BOK to leave its base rate unchanged at 1.25% at the Feb. 24 policy meeting. Only one predicted a 25 basis point increase at the upcoming meeting.
"Inflation, GDP (gross domestic product), monthly industrial activity and employment all support the BOK's current hawkish stance," noted Oh Suktae, economist at Societe Generale (OTC:SCGLY).
He forecasts no change on Thursday, saying three consecutive rate hikes would be "too burdensome for policymakers". But he expects rates to climb to 2.0% by year-end.
"We should be aware that the chance of more hikes is rising given the increasing upside risks to inflation. Like economists in many other countries, we are also not so sure about our ability to forecast inflation in this case," he said.
Economists said another reason for the BOK to remain on the sidelines on Thursday was the country was about to elect its next president in a national vote slated for March 9. Thursday's meeting will also be BOK Governor Lee Ju-yeol's last.
The latest survey found the BOK would hike in Q2 and Q4 of this year, taking the base rate to 1.75% by end-2022 and another increase next year to put it at 2.00% by end-2023.
That was an upgrade from a January survey that put the base rate at 1.50% by the end of this year.
A little under three-quarters of contributors who provided forecasts through the end of this year in both this month's and last month's poll, 16 of 22, expected at least one more hike by year-end.
That would keep the BOK well ahead of its major Asian peers and the U.S. Federal Reserve, which have yet to hike in this cycle following dramatic cuts during the pandemic.
Inflation in South Korea was estimated to average between 2.1% and 2.8% until Q3 and then drop, staying below the central bank's 2% target from Q4 2022 through to at least the end of 2023, a separate Reuters poll found.
(Reporting and Polling by Devayani Sathyan and Tushar Goenka; Editing by Hari Kishan, Ross Finley and Alex Richardson)