Sell-Side Updates Post Yesterday's Policy Decision
Most sell-side analysts look for BoK easing to commence in H2, albeit with varying views on the timing of the first cut. See below for more details.
ANZ: "The policy messaging reiterated a desire to retain a restrictive policy stance and flagged higher uncertainties in terms of the timing of a rate cut, given that the risks to inflation are tilted to the upside.
The BoK has left the door open to a rate cut in H2 2024, in our view. Taking into consideration the robust growth and continued uncertainty around the timing of the Fed’s pivot, the BoK will be patient. We are sticking with our forecast of a single 25bp rate cut in Q4 2024."
HSBC: We continue to think that the BoK can move ahead of the US Fed so long as inflation comes down as expected. However, we watch out for any further delay and/or reduction in market expectation of Fed rate cuts (our US economists expect the Fed to bring one 25bp cut in September in 2024 vs. current market pricing of c40bp cut by year-end); - for its implications on the KRW exchange rate and, consequently, Korea's domestic inflation.
Goldman Sachs: "We continue to expect BOK to start its cutting cycle with a 25bp cut in Q3, compared with current market pricing of no rate cut in 2024. While our baseline scenario remains for the start of easing in July, it would be a close call with August as an alternative, depending on the pace of disinflation over the summer, changes in monetary policy directions of major central banks, and exchange rates of the Korean won."