Economist at UOB Group Lee Sue Ann sees the Bank of Korea (BoK) keeping its policy rate unchanged at 3.5% at its meeting later in the week.

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While all six BOK board members (excluding the Governor) signaled room to bring the rate to a terminal level of 3.75% at the May meeting, we think the BOK’s hands are tied due to the growth risks.

As such, we maintain our forecast for the benchmark interest rate to stay at 3.50% through 2023 and that the BOK will start cutting interest rate in 1Q24.