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By Christine Kim
SEOUL, May 9 (Reuters) – South Korea’s central bank is
expected to keep interest rates on hold at least for the rest of
the year after a surprise cut on Thursday, but there is risk of
another cut depending on the sustainability of the global
economic recovery, a Reuters poll showed.
Eleven out of 17 analysts surveyed after the Bank of Korea
cut rates on Thursday forecast it would leave the policy
interest rate steady at least until year-end. The
remaining six saw at least one more cut.
They were asked about views for the rest of the year.
Earlier on Thursday, all but one of the seven board members
at the central bank voted to cut the base rate by 25 basis
points to 2.50 percent. The market’s consensus view was no
change, a survey of analysts by Reuters before the meeting
found.
“The central bank said the cut was made today in order to
make government policies more effective but I don’t believe
situations have deteriorated enough to lower rates again,” said
Hong Jung-hye, an economist at Shinyoung Securities in Seoul.
Hong forecast the Bank of Korea would hold rates until end-2013.
Respondents who forecast another cut said Bank of Korea
Governor Kim Choong-soo had left the door open to additional
cuts should the economy’s recovery take longer than expected.
Recent data has shown that exports and industrial output in
Asia’s fourth-largest economy have lost momentum. Japan’s bold
stimulus which has pushed down the yen globally, and especially
so against the won, could also hurt the country’s exports.
“If the economy does not pick up despite all these efforts,
the call for another cut will grow stronger,” said Lee
Chang-seon, an economist at LG Economist Research Institute, who
expects one more cut.
“But I believe today’s rate cut would have been better had
it taken place earlier.”
COMPANY NEXT MOVE TIMING
Korea Investment & Securities Cut July and Sept
Tong Yang Securities Cut Q4
LG Economic Research Institute Cut Q3
KTB Securities Cut Q3
HMC Investment & Securities Cut Q3
Samsung Securities Cut Q3
Daewoo Securities Hold until year-end
HSBC Hold until year-end
Shinyoung Securities Hold until year-end
NH Investment & Securities Hold until year-end
Hana Daetoo Securities Hold until year-end
IBK Securities Hold until year-end
SK Securities Hold until year-end
Hanwha Securities Hold until year-end
Nomura Hold until year-end
Mirae Asset Securities Hold until year-end
Bank of America Merrill Lynch Hold until year-end
(Additional reporting by Daum Kim, Chookyung Kim and Narae Kim;
Editing by Choonsik Yoo and Jacqueline Wong)
