Korea: central bank to resume easing cycle next year

Korea’s central bank today left interest rates unchanged at 2.5%, and the hawkish comments from Governor Rhee at the press conference appear to rule out any chance of a rate cut in the next few months. But with growth likely to weaken and inflation set to drop back, it is too soon to call an end to the easing cycle. Provided the property market starts to cool, we think the central bank will resume cutting rates around the middle of next year.