Bank of Korea policy rate likely at 1.50% at July MPC meeting

Governor Lee already hinted at the press conference after the June meeting, the BoK is likely to revise down its 2015 GDP forecast from 3.1% to 2.8% in the quarterly macroeconomic assessment. This should be a natural adjustment reflecting the sustained weakness in exports and manufacturing production as well as the negative (though temporary) impact on domestic demand and the tourism industry from MERS (Middle East Respiratory Syndrome). 

But the BoK's intention to end the monetary easing cycle with the rate cut in June was clearly shown by Governor Lee's exceptional urgings for structural reform and measures on household debts at the press conference, which was again confirmed by the minutes of the June meeting. 

There are unlikely to be dissenting votes as nobody is likely to be "dovish" enough to argue for a back-to-back rate cut. 

"Our base scenario for the BoK monetary policy continues to be no changes in the policy rates for H2 2015 and 2016, though we cannot rule out the risk scenario of even further rate cuts in the case of significant data disappointments", according to Societe Generale. 

The Bank of Korea (BoK) is likely to hold the policy rate at 1.50% at the July MPC meeting, says Societe Generale.