Korea: dovish central bank as political turmoil continues

The Bank of Korea’s latest minutes highlight growing concern over the economy. Given the deteriorating outlook, we expect the BoK to cut rates by a further 75bps this year, a more dovish stance than the consensus.

The political turmoil remains a key risk to the outlook. Opposition parties are pushing to impeach acting President Choi Sang-mok, while the Constitutional Court will on Monday rule on Prime Minister Han Duck-soo’s impeachment. The most critical event, however, is the impending ruling on President Yoon’s impeachment. If upheld, fresh elections would likely see the opposition Democratic Party take power, which could lead to the return of more normal politics and a rebound in confidence.