The Bank of Korea to Keep Interest Rate at 3.50%, Likely to Cut Next Quarter After U.S. Federal Reserve Eases in September - Multibagger Poll
In a recent Multibagger poll, it has been predicted that the Bank of Korea will maintain its key interest rate at 3.50% on Thursday, but may cut it in the next quarter following the anticipated easing by the U.S. Federal Reserve in September. The benchmark rate has been steady since January 2023, with inflation rising to 2.6% in July, further away from the central bank's 2% target.
The Korean won has depreciated over 3% against the dollar this year, making it one of the worst-performing emerging market currencies in 2024. This, along with concerns about rising house prices in Seoul and high household debt-to-GDP ratios, may delay the BOK's rate cut until October.
Economists believe that the BOK will adopt a more dovish stance, especially with the government tightening debt service ratio regulations from September to contain household debt growth. Median forecasts suggest a 25 basis point cut to 3.25% in the October-December quarter, with further reductions expected in 2025.
Overall, the BOK's decision to hold or cut interest rates will depend on factors such as inflation, currency performance, and housing market stability. Investors and consumers should monitor these developments closely to make informed decisions about their finances.