Bank of Korea stands pat but warns against rate cut bets
© Reuters. FILE PHOTO: The logo of the Bank of Korea is considered in Seoul, South Korea, November 30, 2017. REUTERS/Kim Hong-Ji
By Choonsik Yoo and Jihoon Lee
SEOUL (Reuters) -South Korea’s central bank on Thursday flagged it would also no longer be accomplished tightening, sending bond yields hovering, after it held charges in vogue for a Third straight assembly and trimmed this one year’s economic enhance forecast.
The Bank of Korea’s financial protection board unanimously voted to withhold its protection charge unchanged at 3.50%, in a possibility matching the gaze of economists surveyed by Reuters.
It trimmed this one year’s economic enhance forecast to 1.4% from the previous 1.6%, while keeping its inflation projection unchanged at 3.5%.
Governor Rhee Chang-yong, nonetheless, issued some hawkish comments on the lengthy bustle protection stance disturbing market expectations.
“(The board will) manufacture choices reckoning on inflation and other data, and let me ask you no longer to think that we acquired’t ever be in a neighborhood to connect end the charges,” Rhee knowledgeable reporters, pointing to a gleaming charge hike this month by Australia’s central bank.
Bond yields soared, with the shorter-timeframe yields rising extra sharply than longer-timeframe ones, as Rhee’s comments introduced about investors to in the bargain of wait on bets that the Bank of Korea wouldn’t elevate charges further however commence lowering them this one year.
The three-one year treasury bond yield rose as a lot as 12.5 basis aspects to three.496% and the ten-one year yield by 9.7 basis aspects to three.597%.
“Some of his comments were certainly hawkish, however the total conditions include no longer changed loads as to revise my views that the central bank would perchance well even must in the bargain of the charge later this one year,” talked about Paik Yoon-min, mounted-earnings analyst at Kyobo Securities.
Many of the economists surveyed by Reuters sooner than Thursday’s assembly had forecast the following charge swap would be a in the bargain of, perchance throughout the closing quarter of this one year.
The Bank of Korea started raising hobby charges in August 2021 to tame inflation, successfully sooner than the field’s other major central banks, and had raised them by a whole of 300 basis aspects via January this one year.
Asia’s fourth-supreme economy has cooled on leisurely exports and narrowly averted recession in the major quarter. Inflation has slowed since peaking in July last one year however aloof stands a ways above the central bank’s 2% aim.
