VIEW: Bank Of America: Juggling Act Through The End Of Governor Lee's Term

Bank of America have noted that "with the BoK Governor's term ending in a year's time we see no policy action in sight. Through the next 8 policy meetings under Gov. Lee we expect a juggling act by the BoK re: turning optimistic on headline GDP growth and maintaining a cautious tone on the domestic economic recovery. Despite Gov. Lee's innately hawkish bias that we observed before the pandemic, the BoK is likely to focus on managing market expectations about an early rate hike as the domestic economy slowly recovers, which we expect only after COVID herd immunity is reached around year-end. At the upcoming April meeting, we see no rate change as widely expected. Against the backdrop of strong export momentum, the BoK will likely send an optimistic message on the economic recovery ahead of quarterly forecast revisions in May. At the same time, the BoK is likely to take a cautious stance against the recent rise in local COVID-19 cases, and continue emphasizing an 'even recovery' and 'inclusive growth' in the labor market, waiting for a job recovery in the services sector."