Policy Statement Reads Slightly Hawkish

The BoK statement emphasized considerable uncertainties in terms of the outlook for both inflation and growth. The central bank will maintain a restrictive policy stance for a considerable time, with price stability the priority.

• The statement also noted the board will take into account a number of factors whether deciding to raise rates again. These center on inflation trends, growth and financial stability risks, the effect of cumulative tightening and trends in offshore monetary policy.
• Whilst headline inflation forecasts were nudged down for 2024 (unchanged for this year), they were firmed to 3.3% from 3.0% in Feb for 2023. This reflects accumulated pressures along with more favorable services demand.
• These factors are likely to work against any short term expectations of BoK rate cuts. A point Governor Rhee may re-emphasize in his press conference. As we stated earlier expectations for 2024 cuts are still likely to persist though.