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Forex Flash: South Korean new FinMin doesn´t guarantee a rate cut - Nomura

FXstreet.com (Barcelona) - Nomura economist Young Sun Kwon notes that South Korean President Park Geun-Hye today appointed Dr. Hyun Oh-Seok as finance minister.

Young is expecting Hyun to deliver a stimulus package as early as in April and stimulus measures to be targeted, focusing on specific areas such as the property market, small businesses and low-income families. However, he adds that he isnt expecting expect a macro level stimulus such as a rate cut because the economy is not in recession and growth momentum should improve modestly. He writes, “Given our view that upcoming data (February industrial output and March exports) will show an improvement, we see no imminent need for a supplementary budget.”

Nevertheless, should one be approved, Young believes that its support of GDP growth would further reduce the need for a rate cut. A soft landing of the household debt problem is on President Park's 140-point agenda. He writes, “We believe that the Bank of Korea is wary of accelerating the growth recovery via further rate cuts as such a move could trigger another round of household debt increases, given that the new government will likely announce measure to boost the property market. We expect Finance Minister Hyun shares the same opinion.”

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