Updated Sell-Side Views Post Yesterday's BoK Outcome

The US banks update their respective outlooks for the BoK post yesterday's on hold outcome. J.P. Morgan sees cuts commencing in Q3 this year (unchanged), while Goldman Sachs stills expects the easing cycle to comment in May, see below for more details.

J.P. Morgan: "The Bank of Korea maintained its base policy rate at 3.5% as widely expected, with only marginal changes in the policy guidance. The macroeconomic forecasts were little changed from November’s forecast round, and the governor’s comments reiterated January’s message. We continue to expect the first easing action at 3Q24, and a hint of a policy stance change may be provided at the May meeting along with the updated macroeconomic forecasts if the BoK has stronger conviction in inflation stability."

Goldman Sachs: "The MPC statement highlighted progress in disinflation and noted weakness in domestic demand. While the BOK’s macro forecasts were kept unchanged at 2.1% and 2.6% respectively, its core inflation forecast was nudged down by 10bp to 2.2%, and GDP components were changed with weaker domestic demand offset by stronger exports. The Governor noted a new development that one out of six MPC members was open to considering a rate cut over the next three months. We continue to expect inflation to trend down with subdued domestic demand, allowing the BOK to begin easing in late May, with less constraints from US monetary policy thanks to Korea’s improving external balance."