USD/KRW gives up 1,430 after BoK’s expected 25 bps rate cut

Bank of Korea (BoK) Governor Rhee Chang-yong explained the reasons behind the interest rate cut decision in his post-policy meeting press conference on Tuesday.

Additional takeaways

Tuesday's rate decision was unanimous.

Interest rates for special loan programme also lowered.

Four board members said current policy rates could be maintained for the next three months.

Two board members said further rate cuts possible for the next three months.

Market consensus expecting two more rate cuts this year not too different from BoK’s views.

US Dollar-Won market volatility somewhat eased.

The South Korean central bank resumed its interest rate-cutting cycle by lowering the policy rate by 25 basis points (bps) to 2.75% after unexpectedly holding it at 3% in January. The BoK also revised its growth forecasts lower this year to 1.5% from 1.9% while keeping the inflation forecast at 1.9% for this year and next.

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