Rhee Pressor Leaves Hawkish Impression, 3yr KTB Futures Close To Recent Lows

Governor Rhee's press conference left a hawkish impression. A number of things stood out - there was one dissenter, who favored a rate hike, while 5 board members saw the terminal rate at 3.75% (currently at 3.50%). This was shift from the previous board meeting, where 3 members saw 3.50% as favorable for the terminal rate. Governor Rhee also stated that this is not necessarily the end of the tightening cycle, while he also continued to push back on rate cut talk (continuing to call such discussions as premature).

• Inflation remains the key variable for the central bank, which puts added emphasis on the upcoming prints. The board will get both the Feb and March CPI prints before the next board meeting in April.
• Inflation is expected to around 5% in Feb before moderating. If BoK doesn't see enough evidence of a moderating trend, particularly for underlying/core pressures, it may be enough to prompt another 25bps at the April meeting.
• Korean 3yr bond futures have reversed earlier gains, from near 103.80, we now sit back closer to 103.50/55, although there appears to be some support sub the 103.50 level.
• USD/KRW remains weaker, with spot back to 1295, +0.75% firmer for the session so far in won terms, as we highlighted earlier, the firmer equity backdrop is also likely at play.