“Korea’s base rate will drop to 2.5% next year” – Bloomberg

Foreign media predict that Korea’s benchmark interest rate will return to the 2% range next year.

On the 10th (local time), in an article forecasting the interest rates of central banks in 23 major countries, Bloomberg expected the Bank of Korea’s base rate to be 3.5% this year and 2.5% next year. The analysis presented by economists was synthesized and the median value was presented as the predicted value.

Bloomberg analyzed, “Since inflation indicators in the Korean market show a stable trend, the BOK can wait and see for now.” “The Bank of Korea is evaluating the impact of the interest rate hike on the market after the monetary policy committee froze interest rates in February,” he said.

According to the Consumer Price Index for March published by the Office for National Statistics on the 4th, the consumer price index last month rose by 4.2% year on year. It peaked at 6.3% in July last year, recorded 5%, and then fell to 4%. Compared to last month, it decreased by 0.6 percentage points. Accordingly, as the pace of inflation is slowing, there is hope that the BOK will freeze interest rates at the MPC meeting on the 11th.

Bloomberg predicted that even considering various variables, the possibility that the BOK would raise the interest rate from 3.5% is not high, instead it could return to 2% next year. Bloomberg analyzed, “Given that there is a general election in Korea next year, it will not be easy to raise interest rates.”

“Exports are also going downhill compared to the same period last year,” he said. “Korean economy struggles to escape recession.” According to data from the Bank of Korea, the current account balance recorded a deficit of 520 million dollars in February, recording a negative record for two consecutive months. This is the first time in 11 years that the current account deficit has been in the red for two consecutive months. The current account in January was a record $4.21 billion.

The cause of the current account deficit is sluggish exports. Exports in February fell 6.3 percent year-on-year to $50.52 billion. Based on customs clearance, semiconductor exports fell by 41.5%. Steel products and chemical products also fell by 9.2% and 9.8%, respectively.

Meanwhile, Bloomberg predicted that the US Federal Reserve (Fed) will finish raising the benchmark rate this year and return to lowering it next year. Currently, the base interest rate in the United States is 5%, but it is expected to rise to 5.25% and then cut by 1 percentage point next year.

Although uncertainty is growing in the market due to the bankruptcy of Silicon Valley Bank (SVB) and the emergency sale of Credit Suisse (CS), Bloomberg diagnosed that the Fed is very likely to choose a 0.25 percentage point hike. Bloomberg said, “US officials emphasize that we must respond calmly to the bankruptcy of the SVB.”

Anna Wong, chief economist at Bloomberg, said: “The recent announcement of oil production cuts by OPEC+ and tight labor market supply will keep US inflation at 4% through this year, making it difficult to’ r Fed cut rates.” “There is a high possibility that the economy will enter a period of mild recession at the end of this year,” he said, predicting that the Fed would raise interest rates by 0.25 percentage points in May and keep it until the end of the year . year.

[저작권자 @머니투데이, 무단전재 및 재배포 금지]