The Bank of Korea, at its upcoming meeting, is likely to keep its policy rate unchanged at 1.50%. The committee is expected to discuss the current global financial market volatility during the meeting, while several members are expected to be concerned regarding the considerable drop in January exports. However, the possibility of lowering rates in February is very low due to the MPC's overwhelmingly cautious stance, confirmed by the January meeting minutes.

The January meeting minutes implies that there is only one dovish member in the Monetary Policy Committee, who mentioned the increasing downside threats to inflation and growth that requires to be addressed by monetary policy.

Other members in the committee have also acknowledged the uncertainties regarding the financial markets and economic outlook. However, they have attributed them mainly to structural factors that need reform rather than cyclical factors. According to one member, the ongoing issue of weak growth cannot be solved by "temporary" actions to stimulate aggregate demand.

Major concern is likely caused by a severe contraction in exports in January. The fall in exports was widespread throughout major products and locations. The weakness in imports is also a cause of concern as it looks to have been led by a drop in volumes and also because of lower energy prices.

"We maintain our forecast that the BoK will hold the policy rate at 1.50% until the end of 2016. We continue to believe that it would take a further downward revision to GDP forecasts for an additional rate cut to be considered", says Societe Generale.