VIEW: ANZ: A Hawkish Pause, But No Change To View

ANZ note that “the Bank of Korea’s decision to keep its policy rate on hold at 3.50%, the first freeze in a year, was not unanimous. One member voted for a 25bp hike.”

• “Notably, while the central bank revised down its 2023 growth and inflation forecasts slightly, a more hawkish bias has emerged within the BoK board, with five members open to 3.75% as the terminal policy rate, as opposed to three previously.”
• “Significant uncertainties remain surrounding the policy rate trajectory, but we believe the bar is high for monetary policy settings to move further into restrictive territory, given the weak growth backdrop and softening demand conditions.”
• “As things stand, we maintain our forecast for a policy rate hold at 3.50% for the rest of the year.”