The Bank of Korea (BoK) left its policy rate unchanged at 0.5% on Wednesday and economists at ANZ Bank expect the policy rate to be kept on hold for a prolonged period, with further monetary accommodation to come in the form of government bond purchases.
See – USD/KRW to test 2018 low at 1054 on a weekly close below 1151/47 – Credit Suisse
Key quotes
“The BoK today unsurprisingly left its policy rate unchanged at 0.50%, in a unanimous decision. It also signalled that it will maintain an accommodative stance until there are stronger signs of recovery.”
“We remain of the view that the current policy rate of 0.5% will stay for a prolonged period. Instead, the focus is on fiscal-monetary coordination, with the governor highlighting that flexible fiscal policy is needed in the current environment. Accordingly, additional monetary support is likely to come in the form of government bond purchases to support fiscal expansion.”
“Should borrowing costs experience another leg up, the BoK is likely to act. For now, a large-scale purchasing program does not appear to be in the works, with the governor noting that actual quantitative easing is not appropriate at this time. He also ruled out additional corporate bond purchases for now.”
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