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Investing.com - The Bank of Korea is likely to maintain its current interest rate at its August meeting before implementing a rate cut in October, according to Bank of America analysts.
BofA cited several factors supporting a hold decision in August, including improving economic sentiment and progress in the US-Korea deal, despite South Korea’s growth rate remaining below its trend growth. The bank also noted caution over housing prices as another reason for the central bank to delay rate cuts.
The financial institution emphasized that while a hold is expected in August, the overall monetary easing path remains unchanged, with more monetary policy committee members—potentially all of them—likely to be open to cutting rates in the coming three months.
BofA forecasts another interest rate cut in the first half of 2026, with the terminal rate expected to reach 2%, especially as the Federal Reserve continues its own easing cycle.
The bank’s analysis suggests that while immediate easing may be delayed, the Bank of Korea remains on track for monetary policy loosening in the near term, with October representing the next likely opportunity for a rate reduction.
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