The past month has sharpened an already tricky policy dilemma. How to steer through weak domestic demand, rising external risks and still manage creeping debt stress without losing market confidence? The Bank of Korea (BOK) has now delivered a fourth rate cut, regulators are tightening the screws on household lending, and the won continues to edge weaker. There’s movement across the board, even so, there is still no straight solution in sight. Politically, the landscape has been transformed. With President Yoon impeached and opposition leader Lee Jae-myung elected, the country has flipped left for the first time in years. There is movement across the board - but the path ahead is still anything but clear.
Monetary Policy
Last month we flagged the BOK’s cautious tone and first move lower. Now they’ve doubled down with another 25bps cut and a deeper downgrade to just 0.8%. The slowdown is now impossible to ignore. The messaging, though, remains cautious. There’s no rush to frontload cuts...
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