The Bank of Korea (BOK) may cut its growth and inflation forecasts at Thursday's policy meeting, but it's likely to hold the line against mounting pressure for more interest rate cuts, analysts said.
"Undoubtedly, data in the first three months [of the year] do not bode well for growth," ANZ analysts said in a note last week. "The central bank will very likely downgrade its [annual growth] estimates."
South Korea's economy expanded 0.3 percent on month in 2014's fourth quarter, revised figures released in March showed, down from an initial reading of 0.4 percent and marking the slowest pace of growth since the first quarter of 2009, during the Global Financial Crisis.
Meanwhile, exports in March fell 4.2 percent on-year, worse than the 1.8 percent decline forecast in a Reuters poll, the largest decline in two years, while consumer inflation rose just 0.4 percent on-year, its slowest pace since July, 1999, the tail-end of the Asian Financial Crisis – amid low energy prices and weak consumer demand.
ANZ expects the BOK to revise its 2015 gross domestic product growth forecast to 3.1 percent from 3.4 percent currently. It also expects the central bank to slash its inflation forecast to 1.0 percent from 1.9 percent.