A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Feb 04 2015

Is a Bank of Korea Rate Cut Imminent?

ECRI has just updated its Korean Long Leading Index (KOLLI), the value of which lies in its ability to anticipate cyclical turns in the economy.

Pressure is mounting for further policy easing in South Korea, after weak government spending, private consumption and exports dragged GDP growth lower in the December quarter, prompting the Bank of Korea (BOK) to lower its 2015 GDP forecast to 3.4% from 3.9%. Indeed, the South Korean economy is facing multiple headwinds, not the least of which is the slowdown in China, South Korea’s largest export market, as well as low inflation, which recently fell to its weakest reading in over 15 years. Is a BOK rate cut imminent, with the official policy rate already at a low not seen since the heights of the Global Financial Crisis?

The latest update to the KOLLI clarifies the economic outlook for Asia’s fourth-largest economy, offering valuable insight into the likely timing of an interest rate cut.

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A Bit of a Surprise?

ECRI January 13, 2015

One of 2014's biggest surprises – falling oil prices – is completely consistent with our timely call on global growth. When made last July, that forecast was opposed to the consensus view. More