South Korea’s macro machine continues to shift gears. Policymakers are easing up on the monetary side but tightening elsewhere - particularly on debt, capital flow monitoring and digital finance. The backdrop hasn’t changed: domestic demand remains soft, external risks are gathering pace, and the government is still trying to walk the tightrope between growth support and financial discipline. This month, though, there’s a stronger signal emerging – one of recalibration, not rescue.
Monetary Policy
No rate move in July - but no shift in tone either. The Bank of Korea (BOK) kept the base rate on hold at 2.5% [flashback to June report], after June’s fourth consecutive cut. The message? Still easing bias, still aiming for a soft landing, but no appetite to front-load more stimulus just yet. Inflation came in at 2.2% y/y in June, slightly higher than expected, and that’s giving policymakers some cover to pause. The focus now turns to whether the BOK is done cutting - or simply waiting to se...
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