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Investing.com-- The Bank of Korea (BoK) is likely to cut interest rates this month despite mounting pressure from a weakening currency, ING analysts said in a note.
South Korea’s jobless rate unexpectedly rose to 2.9% in March, while private sector hiring remained sluggish, suggesting fading support from government job programs. ING noted that the labor market outlook and slowing growth justify further monetary easing, even as the won trades at its weakest level since 2009.
Although a weaker currency complicates the BoK’s policy response, ING sees a slightly higher probability of a rate cut in April than in May.
The KRW’s recent weakness is now more globally driven, unlike in January when political turmoil was the main factor, said analysts
"A second possible scenario is the BoK staying on hold in April, but with clear hints of a cut in May," analysts wrote.
ING also flagged global tariff uncertainty, delays in fiscal support, and political instability as key downside risks to the economy.