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SOUTH KOREA: BOK Rate Cut, A Major Policy Shift?

SOUTH KOREA
EM BulletBulletSouth KoreaAPACEmerging Market News
  • Following on from the surprise cut in rates by the BOK this morning, the Central Bank lowered their GDP forecast for 2024 from 2.5% to 2.3% and their CPI forecast from 2.1% to 1.9%.
  • At the Press Conference Governor Rhee advised that two members opposed the cut and that 3 OF 6 MEMBERS open to further cuts.
  • In recent months, the BOK and the Government appeared at odds with various ministers calling for cuts.
  • Following the meeting the Finance Minister applauded the  BOK publicly.
  • In terms of the currency Governor Rhee played down concerns as to the currency, in what appears to be a significant policy shift.   
  • He said that he believed the BOK and the government have enough tools to stabilize the FX markets pointing to sufficient reserves and recent discussions with the National Pension Service about a swap line.
  • The Won has continued to weaken throughout the day and during the Governor’s press conference was -0.30% weaker on the day.
  • During a press conference at G20 finance ministers conference in Washington in October BOK Governor Rhee said, ‘exchange rates have emerged as a major factor again in deciding on policy rates.’
  • The curve steepened with the 3-year down 7bps and the 10-year flat on the day.
  • The KTB 5-year continued to outperform today with yields progressing lower, now down 8bps on the day at 2.72%.  
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  • Following on from the surprise cut in rates by the BOK this morning, the Central Bank lowered their GDP forecast for 2024 from 2.5% to 2.3% and their CPI forecast from 2.1% to 1.9%.
  • At the Press Conference Governor Rhee advised that two members opposed the cut and that 3 OF 6 MEMBERS open to further cuts.
  • In recent months, the BOK and the Government appeared at odds with various ministers calling for cuts.
  • Following the meeting the Finance Minister applauded the  BOK publicly.
  • In terms of the currency Governor Rhee played down concerns as to the currency, in what appears to be a significant policy shift.   
  • He said that he believed the BOK and the government have enough tools to stabilize the FX markets pointing to sufficient reserves and recent discussions with the National Pension Service about a swap line.
  • The Won has continued to weaken throughout the day and during the Governor’s press conference was -0.30% weaker on the day.
  • During a press conference at G20 finance ministers conference in Washington in October BOK Governor Rhee said, ‘exchange rates have emerged as a major factor again in deciding on policy rates.’
  • The curve steepened with the 3-year down 7bps and the 10-year flat on the day.
  • The KTB 5-year continued to outperform today with yields progressing lower, now down 8bps on the day at 2.72%.