Expectations of a rate cut have risen, particularly after Finance Minister Choi recently expressed concerns over prolonged disinflation.
The negative data trend, inflation hitting a new 15-year low in February (+0.5% y/y), and easing by major central banks add to the pressure for a cut.
Standard Chartered Bank notes in a report on Wednesday:
- We expect the Bank of Korea (BoK) to keep the base rate on hold at 2% on 12 March.
- Our expectation is supported by Lunar New Year data distortions, a continued emphasis on structural reform, and the view that the authorities will wait to assess the impact of two cuts made in H2-2014.
