SOUTH KOREA: The Bank of Korea left the base rate unchanged at 2.0%
overnight, as expected. The central bank looked for CPI “to be stable
for some time given the recent movements of international raw materials”
and noted that stocks have rebounded and the Korean won has rallied
“with alleviation of international financial market unrest, such as the
government debt crises in some European countries.” Credit Suisse looks
for CPI inflation to hit 3% y-o-y before declining later in H2. “We
think the BOK is focusing more on the recovery in growth at the moment,
and will tolerate temporary volatility in CPI inflation,” CS strategists
say. As a result, the BOK may allow the Korean won to strength if
inflation is firmer than expected in coming months, the strategists add.