Bond Experts 57% Predict "January Monetary Policy Committee to Keep Interest Rates Steady"

Bank of Korea Governor Lee Ju-yeol is striking the gavel at the Monetary Policy Committee meeting held on the 27th at the Bank of Korea headquarters on Sejong-daero, Jung-gu, Seoul. The Bank of Korea decided to keep the base interest rate unchanged at 1.25% during the meeting. / Photo by Moon Honam (Photo provided by Bank of Korea)

[Asia Economy Reporter Hwang Junho] Bond experts predict that the Bank of Korea's Monetary Policy Committee meeting on the 14th of this month will keep the base interest rate unchanged.

According to the February Bond Market Sentiment Index (BSMI) surveyed by the Korea Financial Investment Association on the 12th, the base interest rate BMSI was 57.0, with 57 respondents expecting the interest rate to remain steady. This indicates that many expect the rate to be held steady at the upcoming Monetary Policy Committee meeting. Accordingly, the sentiment of bond market experts regarding the base interest rate improved compared to last month's survey (10.0).

However, this index is based on a survey of bond market experts, and 43% of respondents anticipated that the Bank of Korea would raise the base interest rate in January rather than February due to concerns ahead of the March presidential election.

Bond market sentiment regarding market interest rates next month is expected to worsen. Amid ongoing inflation concerns, expectations of interest rate hikes by major countries are acting as factors driving market interest rates up, with 45% of respondents expecting rates to rise next month.

Inflation is expected to remain elevated. Last year, the annual consumer price index rose 2.5% compared to the previous year, marking the highest level in 10 years, and inflationary pressures are expected to persist for the time being. However, considering the possibility of additional base rate hikes in the first quarter of this year, the likelihood of inflation rising next month (28%) is not expected to be high.

Regarding the exchange rate next month, many respondents expect it to either remain stable (54%) or rise (34%) due to concerns over early interest rate hikes and quantitative tightening by the U.S. Federal Reserve.

Accordingly, the comprehensive BMSI slightly declined from 87.9 last month to 85.5.

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