BOK likely to hold its policy rate at 2.0% in March

The Bank of Korea (BoK) is expected to hold its policy rate at 2.0% at its March meeting, thus leaving it unchanged for the fifth consecutive month since November 2014.
 
The BoK's economic assessment should be largely the same as in February. The conflicts between economic and financial stability are likely to continue in March, considering the downside surprises observed in the January activity data and the sustained acceleration in bank household debt growth.

Peer pressure from other central banks should continue as the People's Bank of China (PBOC) and the Reserve Bank of India (RBI) cut rates and the Reserve Bank of Australia's (RBA) maintained easing bias despite the decision of holding the rates in March.
 
Societe Generale notes in a repot on Wednesday:

• We believe one dissenter will vote for a rate cut at the upcoming meeting, given the significant weakness in the January activity indicators, and that is likely to be a precursor to a policy rate cut in April. 
  
  
• We expect the 25bp rate cut in our base scenario to take place in April, along with the quarterly release of the BoK's macroeconomic forecasts. 
  
  
• While the BoK is likely to maintain its GDP forecast of 3.4% in 2015 as well as the Q1 GDP estimate of 0.9% qoq, the composition of Q1 GDP (normalisation of construction investment and weakness in consumption, exports and facility investment) could well justify further monetary easing.