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Korea: BOK should eventually cut rates next year - Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 12, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) - Young Sun Kwon, Research Analyst at Nomura, suggests that the research house’s proprietary indexes suggest a higher likelihood of rate cuts by BOK rather than hikes.

    Key Quotes

    “All four of Nomura’s proprietary indexes to gauge the Bank of Korea’s (BOK) monetary policy direction show that there is a higher likelihood of a rate cut than a hike.

    • We expect the BOK to keep rates unchanged at 1.50% on Thursday, due to a fiscally driven strong Q3 GDP print and increasing expectation for a Fed lift-off in December.

    • Tighter financial conditions (e.g., lower equity prices, wider credit spreads and a smaller amount of available loans) should drag on the highly leveraged Korean economy.

    • We believe that the BOK will be forced to cut rates by 25bp to 1.25% in February 2016 and further to 1.00% in June, in response to weaker growth and deflationary risks.”
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