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The likelihood of a move on rates by the Bank of Korea (BoK) in the first half of the year appears to have gathered some traction on the back of COVID-19 concerns, noted Ho Woei Chen, Economist, CFA at UOB Group.

Key Quotes

“As COVID-19 outbreak poses a new threat to growth, there is increasing possibility that the Bank of Korea (BOK) may explore the option of lowering the benchmark interest rate again. The central bank had cut interest rate twice in 2019, at the July and October meetings to current 1.25% record low. The BOK has earlier signaled room for further cuts though there remain concerns over financial imbalances. We think a 25 bps rate cut in 1H20 is now a possibility but given the rebound in January CPI (to 1.5% y/y from 0.7% in Feb), the BoK may hold off the move at the upcoming meeting next Thursday (27 Feb) while allowing themselves more time to assess the economic impact.”