Bank of Korea Preview: Four major banks expectations

The Bank of Korea (BoK) meets on Wednesday, October 14 at 01:00 GMT. The central bank is likely to keep its 7-day repo rate unchanged at 0.5% and as we get closer to the release time, here are the expectations forecast by the economists and researchers of four major banks. Meanwhile, the USD/KRW pair is trading below 1150, the lowest since January.

ANZ

“We expect the Bank of Korea (BoK) to keep its policy rate unchanged at 0.50%. With its policy rate already so low, the focus has increasingly turned towards other tools including government bond purchases.  Concerns about financial stability risks also support the case against further policy rate reductions.”

Standard Chartered

“We expect the Bank of Korea (BoK) to keep the policy rate unchanged at its Monetary Policy Committee meeting on 14 October. Recent macro data shows a mixed performance: a decline in August industrial production due to a second wave of infections, a solid export performance as major economies re-opened, and a pickup in CPI inflation (though still low) due to bad weather. However, overall economic activity shows a gradual recovery; we expect this to continue unless the global economy is hit again by a resurgence of COVID-19. While the KRW has appreciated since the last BoK meeting in August, the volatility may not be high enough to cause concern. We do not expect the BoK to change its monetary policy against the current backdrop, but rather adopt a wait-and-see stance.” 

TDS

“In Korea, recovery has been slow while inflation remains soft. However, concerns about rising property prices and household indebtedness will factor highly in the decision to maintain policy.”

UOB

“After 75bps cut to the benchmark rate this year, we believe the BoK is done with cutting rates. The central bank reiterated in August that. They have other non-rate tools at their disposal if needed.”