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Korea Bonds Gain as Central Bank Mulls Lowering Growth Forecast

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South Korea’s government bonds advanced as the central bank signaled it will consider cutting its forecast for economic growth next year, spurring speculation the monetary authority will lower interest rates.

“It’s difficult for the Bank of Korea to keep its 3.9 percent growth outlook for 2015,” Governor Lee Ju Yeol told reporters today in Seoul after holding the benchmark policy rate at a four-year low of 2 percent. A reduction in the BOK’s inflation estimate for next year is also “inevitable” given factors such as the drop in oil prices, Lee said. The central bank next meets Jan. 15, when it will release the revised economic outlook.