Bank of Korea likely to keep policy rate on hold, inflation to stay stable in coming months

The Bank of Korea is set to meet for its policy rate decision tomorrow. According to a Scotiabank research report, the central bank is expected to keep its policy rate on hold at 1.50 percent given the country’s benign inflation outlook.

The nation’s headline inflation is likely to stay stable in the coming months after rising to 1.6 percent year-on-year in April and to ease moderately in the period of August to October because of the base effect. Moreover, the Bank of Korea Governor Lee Ju-yeok stated last week that “the South Korea economy has been pulling off stable growth since last year, but it has become hard to be positive because of negative external and internal conditions.

“USD/KRW is likely to trade between 1,055 and 1,085 at present, while local exporters’ dollar selloff will cap upside room for the pair when approaching the month end”, stated Scotiabank.

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