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14 May 2015
Further rate cuts by BoK still on the table – BTMU
FXStreet (Edinburgh) - Analysts at BTMU have not ruled out further easing via rate cuts by the Bank of Korea.
Key Quotes
“The timing of Fed lift-off is important for BOK. As time passes and we get closer to
lift-off, it becomes awkward (but not impossible) for another BOK rate cut”.
“Examining the pattern of Fed Funds vs. BOK repo rates over the past 15 years should cement an impression of lead-lag patterns, with the Fed in the lead”.
“What’s been interesting in recent QE years is BOK trying to buck US interest rate trends but in the end not succeeding”.
“Now a further delay in Fed lift-off such as what markets have increasingly priced will provide BOK with more room to make another cut if it wishes”.
“But if BOK tarries beyond, say, June, it may become awkward to make a cut that might have to be rescinded within a few months (but as we said, not impossible: note over the 2004-06 Fed hike cycle BOK did continue to cut for a while even though the Fed had begun raising rates)”.
Key Quotes
“The timing of Fed lift-off is important for BOK. As time passes and we get closer to
lift-off, it becomes awkward (but not impossible) for another BOK rate cut”.
“Examining the pattern of Fed Funds vs. BOK repo rates over the past 15 years should cement an impression of lead-lag patterns, with the Fed in the lead”.
“What’s been interesting in recent QE years is BOK trying to buck US interest rate trends but in the end not succeeding”.
“Now a further delay in Fed lift-off such as what markets have increasingly priced will provide BOK with more room to make another cut if it wishes”.
“But if BOK tarries beyond, say, June, it may become awkward to make a cut that might have to be rescinded within a few months (but as we said, not impossible: note over the 2004-06 Fed hike cycle BOK did continue to cut for a while even though the Fed had begun raising rates)”.