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BOK: Further Easing Still Forecast

BOK

Yesterday's surprise on hold decision hasn't altered the sell-side BoK outlook, with further easings still expected, see below

J.P. Morgan: "The outcome of the January MPC meeting has not materially altered our outlook on future monetary policy. We still anticipate a 25bp cut per quarter, but now see the timing starting in February rather than January. Of course, as seen in today's decision, the specific timing of a rate cut every three months is tentative and can be finely adjusted based on financial market and economic indicators at the time. However, following the decision of two consecutive cuts in the fourth quarter of last year, we expect a gradual approach towards the lower bound of the neutral interest rate level this year (JPMe 2.0%p.a.), assuming a pace of one cut per quarter. Regarding risks to the outlook, like the BoK, we are also awaiting developments in the political situation and the extent of fiscal policy responses, which could alter growth forecasts (JPMe 1.3%, BoKe 1.9% with downside risk) and monetary policy responses." 

SocGen: "We maintain our forecast that the BoK policy rate will be cut further to 2.0% in 3Q25, reflecting the characteristic of ‘dovish hold’ today. We continue to think that the BoK will reduce the policy rate toward the level below the neutral rate, given the policymakers’ heightened concerns on growth. The cut in the next meeting on 25 February now looks a done deal, and we now expect two 25bp cut in 2Q and one in 3Q. We continue to believe that a supplementary budget is difficult to materialize under the Acting President Choi, and that the burden of boosting economic growth would still fall onto the shoulder of the BoK." 

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Yesterday's surprise on hold decision hasn't altered the sell-side BoK outlook, with further easings still expected, see below

J.P. Morgan: "The outcome of the January MPC meeting has not materially altered our outlook on future monetary policy. We still anticipate a 25bp cut per quarter, but now see the timing starting in February rather than January. Of course, as seen in today's decision, the specific timing of a rate cut every three months is tentative and can be finely adjusted based on financial market and economic indicators at the time. However, following the decision of two consecutive cuts in the fourth quarter of last year, we expect a gradual approach towards the lower bound of the neutral interest rate level this year (JPMe 2.0%p.a.), assuming a pace of one cut per quarter. Regarding risks to the outlook, like the BoK, we are also awaiting developments in the political situation and the extent of fiscal policy responses, which could alter growth forecasts (JPMe 1.3%, BoKe 1.9% with downside risk) and monetary policy responses." 

SocGen: "We maintain our forecast that the BoK policy rate will be cut further to 2.0% in 3Q25, reflecting the characteristic of ‘dovish hold’ today. We continue to think that the BoK will reduce the policy rate toward the level below the neutral rate, given the policymakers’ heightened concerns on growth. The cut in the next meeting on 25 February now looks a done deal, and we now expect two 25bp cut in 2Q and one in 3Q. We continue to believe that a supplementary budget is difficult to materialize under the Acting President Choi, and that the burden of boosting economic growth would still fall onto the shoulder of the BoK."