Bank of Korea: Policy patience case – Standard Chartered

Standard Chartered’s Chong Hoon Park anticipates the Bank of Korea (BoK) maintaining its base rate at 3.00% through October and November, despite an unfavorable mix of inflation and growth. The report notes persistent underlying inflation, robust growth driven by AI and semiconductors, and tighter financial conditions following a significant KOSPI correction.

The analysts project two 25 basis point hikes in 2027, with the terminal rate reaching 3.50% by the end of 2027. The BoK is expected to keep the base rate steady at 3.00% in October and November. While the team acknowledges the growing risk of a November hike, they maintain their base case of a hold in November due to recent market volatility.

The team will closely monitor the October meeting to assess any changes in the risk balance. In related news, AUD/USD gained momentum, pushing the pair towards 0.6950 in the Asian session on Friday. Fed Chair Jerome H. Warsh's remarks on price stability further fueled selling pressure on the US Dollar, allowing the currency pair to appreciate.

USD/JPY, meanwhile, faced fresh selling pressure, dropping to 158.00 in the Asian session as the US Dollar gained strength. Fed Chair Warsh's lack of clarity on future tightening prospects negatively impacted the US Dollar and the currency pair. Gold experienced fluctuating gains and losses, trading below the $4,200 mark per troy ounce as the US Dollar weakened and US Treasury yields remained relatively stable.

The cryptocurrency market faced pressure throughout October, with Bitcoin (BTC) initially sliding below $80,000 before recovering to around $82,000 on Friday, amid macroeconomic concerns and decreasing demand.