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BoK to keep the base rate on hold throughout 2019 – Standard Chartered

Analysts at Standard Chartered are expecting the Bank of Korea (BoK) to keep its base rate on hold throughout 2019 against their previous call, which was for a 25bps hike in Q3-2019.

Key Quotes

“The revision reflects dovish Fed comments, Korea’s weak economic growth, and downside risks from an unfriendly external environment.”

“We recently revised our Fed call and now expect only two hikes in H2-2019 (versus four previously), taking the terminal federal funds target rate to 3.0% (3.5% previously). Against this backdrop, the BoK should feel less pressure from Fed tightening, allowing it to shift its focus from containing capital outflows to boosting growth.”

“The BoK hiked the base rate to 1.75% in November as it emphasised financial stability over growth, despite the economic slowdown. Q3 GDP growth disappointed market expectations due to weak facilities and construction investment.”

 

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