Rate freeze seen as more likely ahead of Monetary Policy Board meeting...bond market sentiment improves

[Financial News] Nine out of 10 bond market experts forecast that the Bank of Korea’s Monetary Policy Board will hold the base rate steady this month.
According to the “November 2026 Bond Market Indicators,” released on the 20th by the Korea Financial Investment Association, a survey of professionals involved in holding and managing bonds found that 93% of respondents expected the Bank of Korea’s Monetary Policy Board to hold the base rate steady at its meeting on the 22nd. The remaining 7% forecast a rate hike.
The overall Bond Market Sentiment Index (BMSI) rose 9.4 points from the previous month to 99.1. The BMSI measures sentiment in the bond market; a reading of 100 or higher indicates favorable market sentiment, with bond prices expected to rise (and interest rates to fall).
Despite concerns about increased volatility stemming from uncertainty over monetary policy in Korea and the United States and the U.S. midterm elections, bond market investor sentiment improved from the previous month.
In particular, expectations for market interest rates to fall strengthened. The interest rate outlook BMSI rose 24.0 points from 99.0 the previous month to 123.0. The share of respondents expecting market interest rates to fall increased by 19 percentage points from the previous month to 40%. By contrast, the share expecting rates to rise fell by 5 percentage points, from 22% to 17%. The share expecting rates to remain unchanged declined from 57% to 43%.
The outlook for market interest rates to fall appears to have been influenced by risk-averse sentiment following a correction in the domestic stock market and expectations that Korea and the United States would hold their base rates steady, despite upward pressure on overseas interest rates, including rising French government bond yields.
Bond market sentiment related to prices and the exchange rate deteriorated. The price outlook BMSI fell 7.0 points from the previous month to 93.0. Factors included the U.S. Consumer Price Index (CPI) for September coming in above market expectations and concerns that geopolitical tensions in the Middle East could push up international oil prices. The share of respondents expecting prices to fall declined from 13% the previous month to 3%, while the share expecting them to remain unchanged rose from 74% to 87%.
The exchange rate BMSI fell 11.0 points from the previous month to 98.0. The share of respondents expecting the exchange rate to rise increased from 4% to 13%, while the share expecting it to fall declined from 13% to 11%.

[email protected] Seo Min-ji Reporter