Bank of Korea Decision-Day Guide: Look for Revisions to CPI, GDP

Bank of Korea board members will decide Thursday whether to leave the key interest rate unchanged at a record-low 1.5% or cut it even lower.
* With 15 of 17 economists surveyed by Bloomberg projecting no change, the focus will be on the BOK’s quarterly update of projections for the consumer price index and economic growth, as well as Governor Lee Ju Yeol’s press conference. Just two analysts forecast a 25 bps reduction to a new low of 1.25%.
* Recent comments by Governor Lee and Finance Minister Choi Kyung Hwan suggest policy makers are upbeat about the economy, especially domestic demand. Industrial output in August unexpectedly expanded along with an increase in retail sales. Still, the ratio of inventories to shipments for manufactured goods was close to the highest level since 2008 and exports, which account for about half the nation’s gross domestic product, have fallen every month this year.
* Key points to watch when policy decision announced about 10 a.m. in Seoul include:
** Decision itself - analysts at Barclays, Nomura and Citigroup are among those who postponed their call for an October rate cut to later this year on signs of better-than-expected economic activity
** Inflation and growth - BOK watchers and investors will focus on how much the central bank reduces its estimates for 2.8% growth and 0.9% inflation for this year
** Lee’s comments at press briefing

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