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Today marked the first meeting for the Bank of Korea’s new board and the decision to cut the policy rate was unanimous, the ANZ Bank analyst team report. The USD/KRW saw some volatile moves but remained within the familiar trade range, currently trading at 1240.40.

Key quotes

“The Bank of Korea (BoK) today cut its policy rate by 25bps to 0.50% against a challenging growth backdrop, as widely expected.” 

“The BoK lowered its 2020 growth forecast from 2.1% to -0.2%, which would mark the first annual contraction since 1998. It now sees inflation at 0.3% (previously 1.0%) this year. For 2021, the BoK is projecting growth and inflation at 3.1% and 1.1%, respectively (previously 2.4% and 1.3%).” 

“The governor signalled that the central bank may be more active in government bond buying, given the government’s fiscal push (a third budget reportedly to the tune of KRW40 trillion, 2% of GDP, is in the works), but direct purchases were ruled out and there was no commitment to a regular purchasing program.”