The Bank of Korea will likely raise interest rates in the third quarter of this year as Korea picks up momentum on economic growth and inflation, the Asia research head of HSBC said.

HSBC Korea disclosed on Friday a global research report by Ronald Man, economist and HSBC global research head of Asia, claiming that inflation pressure and a boost in international trade would keep the current sustained growth rolling.

Man wrote in his report that “we maintain our view that the monetary easing cycle in Korea is over.

“Growth, and inflation, may surprise on the upside and gradually shift the central bank’s stance to a more hawkish side. The next move will likely be a hike from as soon as the third quarter of 2013, should inflation pressures flare up again,” he said.

Man forecast the annual growth rate of Korea’s gross domestic product in 2013 as 3.8 percent, in line with the Bank of Korea’s estimate of “a little under 4 percent.”

Man said the BOK has held on to its wait-and-see approach concerning interest rate adjustment. The BOK has held the rates at 2.75 percent for the last five consecutive months.

Man’s claim runs counter to widespread domestic speculation that the BOK will keep the rates at the status quo.

Rather, Man relied on BOK Governor Kim Choong-soo’s stance that Korea’s economic outlook was “still valid” and that the “interest rate is accommodative.”

He cited HSBC China researchers, saying that the economy in China ― Korea’s No. 1 export destination ― would grow by 8.6 percent this year. Such speculation is further strengthened by China’s recent 1.3 point increase in the post-merger integration index revealed on March 21, signaling that Chinese exports and investments have already begun to accelerate.

By Chung Joo-won (joowonc@heraldcorp.com)