Bank of Korea likely to keep interest rates on hold

The Bank of Korea is set to meet for its policy decision tomorrow. According to a DBS Bank research report, the central bank is likely to keep its interest rates on hold at 1.50 percent, with less urgency to further normalize rates.

South Korea’s headline consumer price inflation slowed below the policy target rate of 2 percent and returned to the 1 percent to 1.5 percent level in the past three months.

In the meantime, the KOSPI has fallen and the long-term KTB yields have increased this month amidst global market volatility.

“We maintain our forecast of two rate hikes this year, in Q2 and Q4. January trade and PMI data suggest that manufacturing growth has bounced back in Q1”, added DBS Bank.

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