BOK cuts growth and inflation forecast, holds policy steady

Since late September, perception has taken a dramatic shift towards South Korean Won (KRW), which has now appreciated close to 7% from its September peak. Similarly country's benchmark stock index KOSPI future rose sharply to close to 250 or more than 13% since slumping towards 220 in late August selloff.

However, when it comes to the economy, central bank of Korea is not so upbeat. The central bank has held policy steady for fourth consecutive time. It has reduced rates to record low of 1.5% from 3.9% in early 2014.

• The central bank now expects economy to grow at 2.7% pace this year, which is 0.1% lower than previous report. Similarly it has cut next year's outlook by 0.1% to growth of 3.1%.
• The central bank now expects inflation to be meager 0.7% in 2015, down from prior forecast of 0.9% and 1.7% for next year.

This change in outlook is unlikely to change materially the course of the currency and assets as bad news are already priced in plenty. However if Chinese economy slows down further, Korea is likely to feel the heat due to its large trade and investment exposure.