ING’s Min Joo Kang expects the Bank of Korea to keep its policy rate at 2.5% next week as inflation remains close to target and financial instability concerns persist. The report argues the rate-cutting cycle ended last year and anticipates stronger exports and a gradual consumption recovery, supporting a neutral policy stance to reduce worries about renewed rate hikes.
BoK seen on hold with neutral stance
“The Bank of Korea is likely to keep its policy rate at 2.5% as inflation remains near 2% and financial instability persists.”
“We believe the rate-cutting cycle ended last year, and the BoK will avoid suggesting possible hikes.”
“Exports are likely to improve even more strongly, and a consumption recovery is expected – although given rising debt, the services burden, and slow recoveries in construction, a neutral stance from the BoK should help ease concerns about sudden rate hikes.”
“Meanwhile, survey data – both consumer and business – should improve further on the back of strong local equity performance and an optimistic view on the IT sector.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
