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Korea: tightening cycle over, rate cuts later this year

The Bank of Korea today raised interest rates by a further 25bps (to 3.50%) and relatively dovish comments by Governor Rhee support our view that the tightening cycle is now over. With growth set to struggle and inflation likely to fall back further, we are sticking with our view that the central bank will begin cutting interest rates in the second half of the year.

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