Bond Experts 89% Expect Base Rate to Remain Unchanged at July Monetary Policy Meeting

[Asia Economy Reporter Minji Lee] The majority of bond experts predicted that the base interest rate would remain steady in July. However, the proportion expecting an interest rate increase rose compared to the previous month.

According to the Korea Financial Investment Association on the 13th, a survey was conducted from the 30th of last month to the 5th, targeting 200 bond holding and management professionals. Among 100 respondents, 89 expected the base interest rate to be held steady at the July Monetary Policy Committee meeting. The sentiment among bond market experts regarding the base interest rate slightly decreased compared to the previous survey in May (98 respondents).

Conversely, 11 respondents anticipated an interest rate increase, up by 9 from the previous month. No respondents expected a decline.

The Financial Investment Association analyzed, "Expectations for a Federal Reserve interest rate hike have declined due to the prospect of a resurgence of COVID-19 in the U.S. caused by variant viruses and the possibility of tapering delays. The Bank of Korea is also predicted to maintain the current interest rate level and keep the base rate unchanged."

Regarding the July bond interest rate calculated based on the survey results, 67 out of 100 respondents expected it to remain steady. Those forecasting a rate increase numbered 26, down by 7 from the previous month. Meanwhile, 7 respondents anticipated a rate decrease, up by 4 from the previous month.

The Financial Investment Association explained, "While the Bank of Korea's intention to normalize monetary policy acts as a factor for interest rate increases, the possibility of a rate decline due to the resurgence of COVID-19 has led to a decrease in respondents expecting a rise in domestic bond market interest rates in July."

This content was produced with the assistance of AI translation services.