BOK may begin rate cuts as early as May 2024: Experts

[Photo by Joint Press Corps]

The U.S. Federal Reserve’s recent signal of potential rate cuts in 2024 has sparked the possibility of South Korea shifting towards a dovish pivot. Experts project that the Bank of Korea (BOK) may begin cutting its policy rates as early as the second half of next year.

BOK officials held a meeting on Thursday to evaluate the current market and assess the impact on domestic financial and foreign exchange markets in light of the recent announcement from the U.S. Federal Open Market Committee (FOMC) meeting.

“Market expectations of a policy shift have been emerging since the latest FOMC,” said BOK Senior Deputy Governor Ryoo Sang-dai.

Experts expect the Korean central bank to begin a rate-cut cycle after the U.S. takes the same step.

Despite a potential end of the U.S. rate hike cycle, overwhelming household borrowing remains an issue.

“If the Fed opts for rate cuts in June, Korea may follow suit in July,” said Ahn Ye-ha, a senior analyst at Kiwoom Securities Co. “In case of economic challenges persisting in the first half of the year, there is a chance of a an active cut even as early as May.”