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Ho Woei Chen, CFA, Economist at UOB Group believes the Bank of Korea (BoK) could reduce its policy rate further at its April event or even before.

Key Quotes

“An interest rate cut is expected to come next. The rapid spread of COVID-19 on a global level (South Korea being a hotspot as well) will pressure the Bank of Korea (BOK) to deliver at least a 25bps rate cut which may come even before its next scheduled rate decision on 9 April”.

“The BOK had resisted consensus call for a 25bps rate cut at its meeting last week (27 Feb) but the aggressive action by the US Fed to slash interest rate by 50bps at an emergency meeting on Tuesday will likely change their calculus even though the preference is clearly not a monetary policy response (particularly in this case of a coronavirus outbreak) as can be seen in the supplementary budgets that were rolled out over the years to target support for various segments of the economy.”