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BOK: Follow Up Easing In November Unlikely

BOK
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The BoK commenced its easing cycle today, cutting rates 25bps to 3.25%. The move was widely expected by the economic consensus and market pricing had also shifted towards an easing. 

  • The BoK statement and rhetoric from Governor Rhee doesn't suggest this is the start of an aggressive easing cycle though. Rhee noted in the press conference that it is fine to see this as a hawkish cut.
  • In the BoK statement it noted: "it is still important to remain cautious of the associated risks such as the impact of the Base Rate cut on household debt. Therefore, the Board will thoroughly assess the trade-offs among policy variables such as inflation, growth, and financial stability, and carefully determine the pace of further cuts of the Base Rate."
  • Hence today's cut will be monitored in terms of its impact on household debt and Seoul property prices.
  • 1 BoK board member also wanted to hold rates steady today. 5 members see the rate at 3.25% in 3 months (i.e. so no change at the next policy meeting), while 1 member sees scope for a rate cut over this time period. The next BoK policy meeting is on Nov 28.
  • The central bank appears comfortable with the inflation backdrop, expecting inflation for 2025 to be close to the 2% target. Uncertainties persist though, as they do for the growth outlook, which was expected to remain positive, albeit at a moderate pace. 
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The BoK commenced its easing cycle today, cutting rates 25bps to 3.25%. The move was widely expected by the economic consensus and market pricing had also shifted towards an easing. 

  • The BoK statement and rhetoric from Governor Rhee doesn't suggest this is the start of an aggressive easing cycle though. Rhee noted in the press conference that it is fine to see this as a hawkish cut.
  • In the BoK statement it noted: "it is still important to remain cautious of the associated risks such as the impact of the Base Rate cut on household debt. Therefore, the Board will thoroughly assess the trade-offs among policy variables such as inflation, growth, and financial stability, and carefully determine the pace of further cuts of the Base Rate."
  • Hence today's cut will be monitored in terms of its impact on household debt and Seoul property prices.
  • 1 BoK board member also wanted to hold rates steady today. 5 members see the rate at 3.25% in 3 months (i.e. so no change at the next policy meeting), while 1 member sees scope for a rate cut over this time period. The next BoK policy meeting is on Nov 28.
  • The central bank appears comfortable with the inflation backdrop, expecting inflation for 2025 to be close to the 2% target. Uncertainties persist though, as they do for the growth outlook, which was expected to remain positive, albeit at a moderate pace.