KOFIA Announces October BMSI
Inflation and Exchange Rate Indicators Both Decrease from Previous Month
[Seoul=Newsis] Reporter Kim Jin-a – The bond market sentiment for October is expected to worsen compared to September. Approximately half of the survey respondents expect the Bank of Korea to freeze interest rates in October.
According to the Korea Financial Investment Association on the 30th, the October comprehensive BMSI (Bond Market Survey Index) was calculated to be 99.1, lower than the 110.4 recorded in September.
A representative from the Korea Financial Investment Association explained, “Volatility increased as both upward and downward responses in interest rate expectations grew,” and “Expectations for inflation and KOSPI strength have intertwined, worsening bond market sentiment in October compared to the previous month.”
The BMSI indicates bond market sentiment with a baseline of 100. A value above 100 indicates that more market participants expect bond prices to rise. This BMSI survey was conducted from the 19th to the 24th, with responses from 100 bond-related professionals working at 51 institutions.
47% of survey respondents anticipated the Bank of Korea would freeze the benchmark interest rate at the October Monetary Policy Committee meeting.
Responses predicting an interest rate increase accounted for 19%, while 34% expected a decrease in rates, marking a rise of 5% and 2%, respectively, compared to the previous month.
The prolonged global high-interest-rate climate and rising uncertainty about monetary policy have increased volatility, resulting in more responses both for rate hikes and cuts compared to last month, the analysis indicated.
Sentiment in the bond market regarding market interest rates worsened compared to the previous month. The interest rate outlook BMSI decreased from 118.0 in September to 115.0 in October.
The inflation BMSI dropped from 90.0 in September to 70.0 in October, and the exchange rate BMSI decreased from 98.0 in September to 91.0 in October, similarly indicating worsened market sentiment.
A KOFIA representative explained, “The expansion of volatility in global financial markets and the uncertainty over Korea-U.S. tariff negotiations have increased pressure for a stronger dollar, resulting in more respondents expecting exchange rates to rise compared to last month.”