Bloomberg: South Korea Joins India-to-Europe Rate Cuts for Growth: Economy

[greengiraffe]

TINA and its really a case of monkey see monkey do for all the top policy makers of key economic power houses globally - All these actions will probably lead to some short term impact on exchange rates (if it is out of consensus expectations) and back to square one should everyone pursue the same copy cat formulae. The big impact, however, the WALL of Money and the accompanied asset bubbles that are in progress and eventually the daily price inflation feed through to the ordinary folks. Stay invested to hedge against the asset and nominal inflation.

http://www.bloomberg.com/news/2013-05-09...rect-.html

South Korea Joins India-to-Europe Rate Cuts for Growth: Economy
By Eunkyung Seo & Cynthia Kim - May 9, 2013 11:45 AM GMT+0800
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The Bank of Korea cut interest rates, following the lead of policy makers in Australia, Europeand India this month, as strength in the won and weakness in the yen dim the outlook for the nation’s exports.
Governor Kim Choong Soo and his board lowered the benchmark seven-day repurchase rate to 2.5 percent from 2.75 percent, the central bank said in a statement in Seoul today. Six of 20 economists surveyed by Bloomberg News predicted the move while the remainder forecast no change. Kim supported a cut after opposing one last month.
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Kim Choong Soo, governor of Bank of Korea, attends a monetary policy meeting at the central bank's headquarters in Seoul on May 9, 2013. Source: Yonhap News via Bloomberg

4:35

May 9 (Bloomberg) -- Michael Kurtz, Hong-Kong based head of global equity strategy at Nomura Holdings Inc., talks about South Korea's economy, central bank monetary policy and the stock market. Kurtz also discusses the outlook for China's economy with Zeb Eckert on Bloomberg Television's "On the Move." (Source: Bloomberg)

2:56

May 9 (Bloomberg) -- Ronald Man, an economist at HSBC Holdings Plc in Hong Kong, talks about South Korea's economy, central bank monetary policy and the local currency. The Bank of Korea joined central banks in Australia, Europe and India in cutting interest rates this month, as a weak yen dims the outlook for the nation's exports and record household debt weighs on consumption. Man speaks with Zeb Eckert on Bloomberg Television's "On the Move." (Source: Bloomberg)
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The Bank of Korea headquarters stands in Seoul. Lawmakers approved a 17.3 trillion won ($15.9 billion) extra budget this week to support the economy and the central bank last month boosted special loans for small firms. Photographer: Jean Chung/Bloomberg
As central banks around the world move to counter currency appreciation, the won’s 24 percent jump against the yen in six months is hampering South Korean exporters of autos and electronics and aiding their Japanese rivals. In Seoul, ruling New Frontier Party floor leader Lee Hahn Koo yesterday urged a “more active role” for the BOK, adding to political pressure that the central bank resisted last month.
“Japan’s policies must have played a very big role in today’s decision,” said Huh Kwan, a Seoul-based fixed-income trader at Korea Investment & Securities Co., one of South Korea’s 20 primary dealers. “The cut can be seen as action to ease a worsening impact on exports.”
The won was little changed against the dollar, trading at 1,086.65 as of 11:44 a.m. in Seoul. The Kospi stock index rose 0.8 percent.
China, Australia
Across the Asia Pacific region, data gave a mixed picture. China reported inflation below the government’s 3.5 percent target and the steepest decline in producer prices in six months, highlighting weakness in the world’s second-biggest economy. Australian employers added more than four times as many jobs as analysts estimated, sending the local currency higher.
Malaysia is forecast to keep interest rates on hold today. Elsewhere, the Bank of England is projected to keep its target for asset purchases unchanged, while jobless-claims data will be released in the U.S.
As Japan’s monetary easing drives down the yen, nations including Australia, New Zealand and Switzerland are moving to counter currency gains. Sweden’s Finance Minister Anders Borg warned May 7 the krona’s strength is becoming a concern for the nation’s export-oriented economy and called on the central bank to consider that.
Today’s move in South Korea is to bolster the effect of extra government spending, and may help to increase full-year growth to 2.8 percent from the BOK’s April forecast of 2.6 percent, Kim told reporters at a briefing in Seoul. Lawmakers approved a 17.3 trillion won ($15.9 billion) extra budget this week to support the economy and the central bank last month boosted special loans for small firms.
Aggressive Easing
Kim’s officials voted six-to-one today. Last month, when interest rates were left unchanged, the split was four-to-three, the deepest division since 2006. He said that Japan’s “aggressive monetary easing” is having a significant effect on South Korea.
“What we’re seeing is another round of global easing from Japan to Europe and South Korea needs similar action,” Lee Sang Jae, a Seoul-based economist at Hyundai Securities Co., said before the announcement. “The rate cut will help the nation’s fight against a weak yen.”
South Korea’s economy grew the most in two years in the first quarter as the government front-loaded spending. At the same time, industrial output fell 2.6 percent in March from the previous month, the biggest decline in a year.
European Central Bank President Mario Draghi said May 6 that policy makers are ready to lower interest rates again if needed after reducing them to a record low. The Reserve Bank of Australia cut to a record this week, and India made a reduction last week.
To contact the reporters on this story: Eunkyung Seo in Seoul at [email protected]; Cynthia Kim in Seoul at [email protected]
To contact the editor responsible for this story: Paul Panckhurst at [email protected]

[AlphaQuant]

don't forget Poland (cut 25bps to 3%) and Kenya !! (cut 1% to 8.5%)

MAS policy in Oct will be interesting to watch - plenty of expectations to weaken the SGD to aid the exporters but with labor tight and no output gap, i think capital inflows into Sg can still be expected.