The Bank of Korea (BoK) will hold its Monetary Policy Committee (MPC) meeting on 9 April. The base rate is expected unchanged at 1.75%. The central bank delivered a base rate cut on 12 March against the consensus view of no change. Although the bond market appeared to have priced in the cut two days before the meeting (i.e., since the release of the dovish February MPC meeting minutes), it is concerned about the BoK’s lack of communication. Governor Lee later admitted at a press conference that he may have given a weak signal, and pledged to provide clearer messages from now on. He also stated that the unexpected rate cut in March was in response to other central banks’ policy moves and due to the slow consumption and export recovery in Korea.The government recently proposed a new mortgage purchase programme, to restructure the current mortgage portfolio so as to reduce the household debt burden. However, the new programme covers less than c.8% of total mortgages, causing significant concern about financial stability. BoK will be cautious in its decisions to ease further.“We expect the central bank to lower its 2015 growth and inflation forecasts at the April meeting, in line with our recently revised forecasts. We maintain our growth forecast of 3.2% y/y (versus 3.6%) and CPI inflation forecast of 1.3% y/y (versus 2.1%)”, Said Standard Chartered in a report on Wednesday

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