Bank Of Korea Keeps Interest Rates Unchanged Warns Against Rate Cut Rumors

Bank Of Korea Keeps Interest Rates Unchanged Warns Against Rate Cut Rumors by Emily Clark last updated on April 18, 2023

Bank Of Korea Keeps Interest Rates Unchanged, Warns Against Rate Cut Rumors

The central bank of South Korea kept its interest rates unchanged on Tuesday. But the central bank also warned that the chances of a rate cut in 2023 are very low.

So for those who were looking for rate cuts on Tuesday or hints about it, it seems that the Korean central bank is in the mood to do that! The Bank of Korea cited how high inflation is a bigger risk than slow economic progress!

Bank Of Korea: Governor Commentry Remains Neutral

Overall, the comments made by the governor of the Bank of Korea were neutral, and the board unanimously agreed to keep the interest rates unchanged.

However, some economists believe that the Bank of Korea has turned dovish, especially after discussing the rumors of rate cuts.

In the previous meeting, just one member voted for a rate hike. But in the recent meeting, there was not even a single one voting for a rate hike.

As a result of the meeting, the interest rate in the Bank of Korea remains at 3.50%. For the most part, this decision was expected, so there's no surprise there!

The tightening cycle was started by the Bank of Korea in 2021, and it appears that we are now reaching the peak!

According to majority of the board members, it is too soon to think or even talk about rate cuts in 2023. Many of them even called it somewhat excessive!

The reason for this can be traced back to the fears related to high inflation. There are many who are uncertain whether the inflation will fall to the projected range or not!

That's why most of the board members are of the view that there's room for at least 1 additional rate hike. So in a sense, an additional rate hike is on the cards rather than rate cuts!