Prakash Sakpal, Economist at ING, points out that the Bank of Korea will announce its policy decision on 30 November and the rhetoric has been swinging between a rate hike and staying on hold.
Key Quotes
“Contrary to the message from a chunky 22% annual export growth in October, there is little room for growth optimism. Manufacturing continues to be weak, the inventory-to-shipment ratio remains elevated, and the risk of a downturn in the global electronic cycle is lingering. Supply disruptions due to nationwide factory workers’ strike against labour policies is another thing.”
“The last central bank rate hike by 25 basis point to 1.50% was in November 2017. Even if the central bank is under pressure from the government to resume tightening to rein in rising house prices and household debt, the newly appointed finance minister Hong Nam-ki admits the next year will be “considerably difficult” for the economy. And the central bank governor Lee Ju-yeol has resisted calls of a rate hike to cap house price, despite the downward pressure on the economy.”
“We continue to see the BoK leaving the policy on hold until the third quarter of 2019, and even this may get pushed back if things worsen further.”
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