Economist at UOB Group Ho Woei Chen, CFA, reviews the latest BoK monetary policy meeting.

Key Takeaways

“In line with consensus and our expectation, Bank of Korea (BOK) extended its interest rate pause… keeping the benchmark 7-day repo rate at 3.50% for the third consecutive meeting. However, BOK’s tone turned out to be more hawkish than expected.”

“The central bank also updated its economic forecasts today as it sees higher core inflation and slower growth in 2023.”

“For now, we think BOK’s hands are tied but it should start to tone down its relatively more hawkish rhetoric as US’ Fed rate peaks and provide early signals for interest rate cuts that are likely to materialize nearly next year as inflationary pressure eases sufficiently. We maintain our call for the BOK to start cutting interest rate in 1Q24