"Wartime and Inflation Concerns...April MPC Expected to Unanimously Hold Rates Steady"

Securities analysts predict that the Bank of Korea’s Monetary Policy Committee (MPC), which is scheduled to convene this week, will unanimously decide to keep the base interest rate unchanged at the current annual rate of 2.50%. In light of the increased upside risks to the economy and inflation following the outbreak of war between the United States and Iran after the February MPC meeting, it is also expected that the Committee will deliver a message emphasizing that all monetary policy options remain on the table.

Lee Chang-yong, Governor of the Bank of Korea, is striking the gavel at the Monetary Policy Committee full meeting held at the Bank of Korea headquarters in Jung-gu, Seoul, last February. 2026.02.26 Photo by Joint Press Corps

Kang Seungwon, a researcher at NH Investment & Securities, stated in the report “The Burden of the February MPC” on April 6, “Given the uncertainty caused by the war and the upcoming leadership transition, I expect the April MPC to unanimously freeze the base rate.”

First, Kang noted, “Due to the impact of the US-Iran war, uncertainty surrounding the economic outlook has risen sharply in the run-up to the release of the revised economic outlook in May.” He also highlighted the importance of the upcoming leadership transition at the Bank of Korea. Since it is difficult to respond with monetary policy measures at this time, he analyzed that the April MPC is also likely to see a unanimous decision to keep the base rate unchanged. The April MPC, scheduled for the 10th, will be the last one presided over by Governor Lee Changyong before his term ends on the 20th.

The key issue is the message from the February MPC, which was considered quite dovish (accommodative) just before the outbreak of war. Kang pointed out, “With the war breaking out immediately after the February meeting, the April MPC faces the task of moving away from the dovish tone of February.” At the February meeting, two MPC members suggested, via a Korean-style dot plot, that there was a possibility of a rate cut within six months.

Accordingly, Kang suggested that “efforts will be made to leave room for monetary policy maneuvering.” He added, “During the press conference, it is expected that the Committee will emphasize the need to keep all monetary policy options open, given that while they will be closely monitoring the development of the war for the time being, downside risks to the economy and upside risks to inflation have both increased significantly.”

However, he evaluated that “the statement will be more neutral compared to February, but since the market has already priced in more than two rate hikes, the impact on the (bond) market will be limited.” He further predicted, “Market trends will be determined more by the course of the war than by the MPC.”

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