Global investment banks raise S. Korea’s 2026 inflation outlook amid weak currency

Major financial institutions have raised their 2026 inflation forecasts for South Korea, citing the continued weakness of the local currency against the US dollar, industry data showed Thursday.

According to forecasts from 37 institutions, including major investment banks (IBs), compiled by Bloomberg, the median projection for the country’s consumer inflation for next year stands at 2 percent. It marks an increase of 0.1 percentage point from 1.9 percent presented at the end of last month.

Fourteen institutions have revised up their forecasts during the period, while only three lowered them. The remaining institutions kept their projections unchanged.

Last month, the Bank of Korea presented its latest inflation outlook for next year, raising its forecast to 2.1 percent from the previous 1.9 percent.

The central bank also warned that consumer inflation could rise to the mid-2 percent range if the domestic currency remains weak.

The Korean won has hovered near its yearly low in recent weeks, nearing the 1,500 won level this week after slipping below the psychologically important 1,450 won level in November for the first time since April.

On Wednesday, however, the won posted its sharpest daily rise against the US dollar in more than three years after strong verbal intervention by foreign exchange authorities.

(Yonhap)

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