Will the Bank of Korea make no change to the base rate after the July Meeting?

Prediction markets put the probability at 7%: Will the Bank of Korea make no change to the base rate after the July Meeting. Currently, markets see this as unlikely (7% YES). Westpac: Reserve Bank of New Zealand has time to wait for more data.

What’s Happening

The question of whether the Bank of Korea make no change to the base rate after the July meeting arrives amid a broadly cautious global rate-setting backdrop. Across peer central banks, the dominant July stance has been to hold: Westpac expected the Reserve Bank of New Zealand to keep its official cash rate unchanged at 2.25% on July 8, citing a faster-than-expected decline in oil prices that eased inflationary pressure and bought policymakers more time to observe the economy. That easing in energy costs has reshaped the six-week outlook for several inflation-targeting banks in the Asia-Pacific and North American regions. [Bitget, Jul 05]

The comparison is not uniform, however. A Reuters poll found the Bank of Canada would hold its overnight rate at 2.25% on July 15 and keep it there well into next year, even after inflation rose to 3.2% in May and breached the 1%-3% target range for the first time since December 2023. In the United States, Federal Reserve minutes released on July 8 showed officials deeply divided, with the FOMC holding rates at 3.5%-3.75% and a renewed Middle East conflict pushing the implied odds of a September hike to nearly 70%. That mix of holds and hawkish repricing frames the risk around whether the Bank of Korea make no change to the base rate after the July meeting. [Kitco, Jul 10]

In Seoul, currency traders on July 6 watched the KOSPI and the dollar-won exchange rate at the Hana Bank dealing room as global shares traded mixed and oil slipped following OPEC+ plans for an August output hike. Softer energy prices and a resilient won ease the case for tightening, while regional growth concerns keep an adjustment on the table, which explains why market pricing leans against the Bank of Korea make no change to the base rate after the July meeting. The decision, and its accompanying guidance, will signal how Governor-led policymakers weigh contained inflation against external volatility. [The Sun Chronicle, Jul 06]

Traded on Polymarket — $52K Volume

Lower-volume market on Polymarket ($52K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 7c YES.