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Korea Monetary Policy November 2023

Korea: BOK stays pat at November meeting

At its meeting on 30 November, the Bank of Korea (BOK) kept the base rate unchanged at 3.50%. The decision was unanimous and matched market expectations.

Compared to its last projections in August, the BOK raised its inflation forecasts for 2023 and 2024 slightly. However, the BOK still expects average inflation to decline in 2024 to just above the 2.0% medium-run target, pushing it to stay pat.

In its forward guidance, the BOK slightly softened its hawkish tone; the number of board members seeing further rate hikes as necessary fell to four from six last month. Our panel does not expect any further rate hikes ahead, with most of our panelists expecting the BOK to begin cutting its policy rate by Q2 2024.

The date of the next BOK meeting is 11 January.

ING’s Min Joo Kang commented:

“If inflation returns to the 2% level from early next year and domestic growth conditions worsen, then we expect the BoK to change its policy direction as early as the second quarter. However, if the financial imbalance does not improve, the BoK’s rate cut is likely to be pushed back to the second half of next year.”

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