South Korean Central Bank Left Its Policy Rate Unchanged

Bank of Korea (BOK) Governor Rhee Chang-yong said at the press conference following the monetary policy meeting said that “Thursday's decision should not be taken as indicating the tightening cycle is over.”

Earlier on, the South Korean central bank left its policy rate unchanged at 3.50%, as expected. The BOK lowered its inflation forecast from 3.6% to 3.5% for this year.

Additional quotes

Board member Cho Yoon-je dissented to Thursday's rate decision.

Sees recent Won weakening as having little to do with domestic issues.

Five board members wanted to keep chances for terminal rate reaching 3.75%.

Downgrade of inflation forecast mostly due to oil prices.

Short-term money market has mostly returned to stability.

Thursday's decision was based on expectation that inflation will head down from March.

It is time to stop and watch if inflation trend goes along expected path.

No comment on whether herd behaviour is behind Won's recent movement.

Market reaction

USD/KRW is consolidating the latest downswing, triggered by the BOK policy announcement. The pair is trading 0.55% lower at 1,295.78, having tumbled sharply from near the 1,302.50 region.