Government Bond Yields Fall Across the Board... 3-Year Bond at 2.907%

The Bank of Korea Holds Base Rate at 3.5%... Emphasis on Dovish Interpretation

[Image source=Yonhap News]

On the 22nd, yields on government bonds fell across the board. This appears to reflect expectations of a base interest rate cut.

In the Seoul bond market that day, the yield on 3-year government bonds closed at 2.907% per annum, down 3.3 basis points (1bp = 0.01 percentage points) from the previous trading day.

The 10-year yield fell 1.7bp to 2.980% per annum. The 5-year and 2-year yields dropped 2.7bp and 2.2bp respectively, closing at 2.933% and 3.022% per annum.

The 20-year yield decreased by 0.3bp to 2.995% per annum. The 30-year and 50-year yields each fell 0.1bp, recording 2.903% and 2.817% per annum respectively.

The Financial Monetary Policy Committee of the Bank of Korea unanimously decided to keep the base interest rate steady at the current 3.5% per annum. In the monetary policy statement, the word "sufficiently," which indicated the tightening stance period, was removed, lending more weight to a dovish (monetary easing preference) interpretation than before.

Although no dissenting opinions favoring a rate cut appeared, the number of committee members open to a rate cut within three months increased from two to four.