MNI BoK Preview - August 2024: Easing Coming But August Too Early

EXECUTIVE SUMMARY

• July’s surprise rise in CPI will likely see the Bank of Korea on hold at tomorrow’s meeting. The Governor of the Bank of Korea has also spoken openly about the concern with house prices in Seoul. A rate cut at the current juncture may send the wrong signal to the broader market.
• With consumer confidence abating and retail sales expected to soften, there should be sufficient downward pressure on inflation to support a cut in the coming months, depending on whether the hold in rates can calm house prices.
• Overall, our firm bias is for no change tomorrow, but we wouldn’t be surprised to see the central bank open the door further for the easing cycle to commence in Q4.
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BoK Preview - august 2024.pdf