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Bank of Korea likely to cut benchmark repo rate by 25 bps in October

The Bank of Korea is scheduled to meet tomorrow for interest rate decision. According to a DBS Bank research report, the South Korean central bank is likely to cut the benchmark repo rate by 25 basis points to 1.25 percent, and meanwhile, downgrade its 2019 GDP growth and CPI inflation forecasts.

The latest set of economic data continued to be weak, putting pressure on the Bank of Korea to underpin growth and prevent deflation risks. Exports shrank for the 10th straight month by -11.7 percent year-on-year in September. The headline inflation eased to -0.4 percent in September, the first negative reading over more than half a century.

“Although retail sales and consumer confidence picked up, it could be attributed to the temporary rise in holiday demand ahead of the Chuseok Festival. Externally, monetary easing by global major central banks and stabilisation in the KRW also provide room for the BOK”, added DBS Bank.

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