SEOUL (Reuters) - South Korea’s central bank chief on Monday said the bank is not in a hurry to implement any easing at the moment, contrary to expectations in the bond market that the Bank of Korea is poised to cut interest rates soon for the first time in three years.
“We need to monitor further but it seems the situation doesn’t warrant to review an easing in policy interest rates now,” Governor Lee Ju-yeol told reporters at a press conference in Seoul.
Lee said recent falls in bond yields seem “excessive,” when asked if a fall in the three-year bond yield the key interest rate at 1.75 percent signaled high expectations for a rate cut.
Any easing by the BOK would mark a U-turn from its tightening cycle, something most economists still say is likely to happen only next year.
But brokerages including Nomura Securities and Daishin Securities recently brought forward their expectations for a BOK cut to later this year as U.S. treasuries led a rally in debt markets globally die to the risks of a recession, which would move central banks onto a new rate-cutting cycle.
The BOK sees this year’s economic growth at 2.6 percent, the weakest in seven years, as exports suffered declines for a fourth straight month in March on cooling demand from China, while inflation stayed below the bank’s target rate for three months in a row.
Reporting by Cynthia Kim; Editing by Simon Cameron-Moore