Seven out of 10 bond experts predicted that the Bank of Korea's Monetary Policy Committee will lower the base rate at its meeting on the 29th.
The Korea Financial Investment Association announced on the 27th the 'June 2025 Bond Market Indicators' containing this information. Sixty-nine percent of bond experts expected a rate cut at the Monetary Policy Committee meeting in May, an increase of 12 percentage points from the previous survey. The proportion of respondents anticipating the base rate to remain unchanged was 31%.
The Korea Financial Investment Association explained, "With the exchange rate of the won versus the U.S. dollar stabilizing and heightened downward pressure on the economy due to sluggish domestic demand, more experts increased their expectations of a rate cut at the Monetary Policy Committee in May."
Regarding market interest rates in June, 35% responded that they would decline, while 28% indicated they would rise. Although the outlook for a decline was more dominant, the percentage of respondents anticipating an increase rose by 12 percentage points from the previous survey. This is interpreted as a concern over rising long-term government bond yields in major countries such as the U.S., Japan, and Europe, along with an expansion of domestic government bond issuance.
The sentiment in the bond market related to prices improved compared to the previous month. Sixteen percent of respondents indicated that prices would fall, which is a 4 percentage point increase from the previous month. Conversely, the percentage of respondents forecasting a price increase declined to 5%, a drop of 13 percentage points during the same period. This is attributed to weakening demand and falling international oil prices.
In terms of exchange rates, 53% of respondents said they would fall, an increase of 9 percentage points from the previous month. The Korea Financial Investment Association noted, "The recent decline in the won-dollar exchange rate and the improved conditions for foreign exchange supply and demand due to a sustained current account surplus contributed to this. And the.
The comprehensive Bond Market Sentiment Index (BMSI) calculated based on responses to the survey questions was 114.8. This is an increase of 1.3 points from the previous month. The BMSI is an indicator that shows the sentiment of the bond market, with a reading above the baseline of 100 indicating that the sentiment is positive.