Bank of Korea (BOK) Governor Rhee Chang-yong told a news conference after the monetary policy meeting that “Thursday’s decision should not be taken as a sign that the tightening cycle is over.
Earlier, South Korea’s central bank left its own base rate unchanged at 3.50%, as expected. BOK reduced the inflation forecast for this year from 3.6% to 3.5%.
Board member Cho Yoon-je disagreed with Thursday’s rate decision.
Won sees the recent weakening as having little to do with domestic problems.
Five board members wanted to keep the chance of a terminal rate at 3.75%.
Lowering the inflation forecast mainly due to oil prices.
The short-term money market has mostly returned to stability.
Thursday’s decision was based on expectations that inflation will trend downward from March.
It is time to stop and see if the inflation trend is going in the expected direction.
No comment on whether herd behavior is behind Won’s recent move.
USD/KRW consolidates recent decline triggered by BOK policy announcement. The pair is trading 0.55% lower at 1,295.78, having fallen sharply from the area near 1,302.50.