The Bank of Korea (BoK) today left its policy rate on hold at 2.0%, and lowered its 2015 GDP growth and inflation forecasts. Although the forecast downgrades may fuel speculation about rate cuts, we think the economy is set to rebound in the coming months, while the BoK will also be concerned that loose monetary policy could cause household debt to rise further. Given this, we think interest rates are likely to be kept unchanged for some time yet.
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