7At this month’s Monetary Policy Board meeting, downward pressure on interest rates may prevail.
Samsung Securities analyst Kim Ji-man said that 7if the Monetary Policy Direction statement and the press briefing at this month’s Bank of Korea Monetary Policy Board meeting are less hawkish than the market expects, downward pressure on interest rates could become dominant. The backdrop is a sharp drop in oil prices and stable core inflation, while the bond market has already largely priced in the possibility of a hike.
Samsung Securities analyst Kim Ji-man said that 7if the Monetary Policy Direction statement and the press briefing at this month’s Bank of Korea Monetary Policy Board meeting are less hawkish than the market expects, downward pressure on interest rates could become dominant. This could have a direct impact on the bond market and financial stocks.
Analyst Kim cited the sharp drop in oil prices and the stabilization of core inflation as the basis for that view. He said movements in oil prices and core inflation are affecting the transmission of monetary policy.
The report said the bond market has already largely priced in the possibility of this hike. The yield on government bonds with a maturity of 3 years was 3.77%, about 1.30percentage points higher than the benchmark rate.
The document says that the wording of the monetary policy direction statement and the tone of the press briefing are key variables that will determine market reactions. The implication is that if the gap between interest-rate expectations and market expectations narrows, the market’s direction could change.
The report was 11released in preview form. It concluded that market reactions can be judged more clearly only once the Bank of Korea’s actual announcement and the related wording are published.
Sources: 연합인포맥스
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