Reference To Further Rate Hikes Removed, But Policy To Stay Restrictive

The BoK statement, which accompanied its on hold decision, removed the reference to judging whether rates needed to be raised further. At the same time though the central bank stated that it would keep policy restrictive for a sufficiently long period to ensure that inflation returns to target.

• Other highlights from the statement included: the inflation slowdown is likely to moderate from here and fluctuate around 3% for some time (they have a 2.6% forecast for 2024). Core inflation is expected to continue to ease modestly.
• GDP growth is seen broadly in line with what was expected in November (2.1% for 2024). Consumption and construction investment are expected to recover slowly, with exports remaining the lead at this stage.
• Risks were highlighted in the real estate project finance sector.
• We now wait for BoK Governor Rhee's press conference. The central bank is clearly done with rate hikes, but a shift to rate cuts may still be at least quite a few months away.