February 26, 2025 03:42 GMT
SOUTH KOREA: FWDS Reprice Rate Expectations following BOK
SOUTH KOREA
The cut in interest rates yesterday by the BOK was anticipated by forecasters yet forward rate expectations prior to the meeting, less convinced.
In the period since 20 Feb this year (the 20th saw PPI steady at 1.7% and Consumer Confidence weak) up to the day prior to the BOK meeting, the 3 month forward 1 month (NDIRS) had priced in 7bps of cuts and a full cut priced by 6 months.
The market has repriced overnight with very limited now priced in and a further cut no longer fully priced in until further out. Per the MIPR function on BBG, the market has the 1yr ahead policy rate at around 2.40%, so less than 2 cuts priced in.
- This is despite Governor Rhee indicating in the press conference that the ‘market view’ was for two to three more cuts this year (including February's). If his comment on ‘market view’ is correct, there appears scope for forward markets to re-price in NDIRS space leading up to the next BOK meeting on April 17.

Keep reading...Show less
172 words