Will the Bank of Korea cut by 25 bps at the November 2026 meeting?

This market resolves on whether the Bank of Korea cuts its policy rate by 25 basis points at the November 2026 meeting. The price is 6%, while our model estimates 40%. This is a classic case of underpricing a cyclical easing cycle, where the market assumes near-total inaction.

The key drivers: Korea's economy depends on semiconductor exports and is sensitive to global demand, while Korean inflation has repeatedly returned to the 2% target in recent cycles. When growth slows and the won is firm, the Bank of Korea has historically moved to cut faster than markets expect. In addition, the Fed is likely already easing or close to easing in the same window, which relieves pressure on the won and gives the BOK room to maneuver. At 6%, the market requires near-total inaction from the central bank, which does not match the base case.

For the outcome to win, a majority of the board must vote for a 25bp cut at the November 2026 meeting. The main risks are sticky inflation or elevated Seoul housing prices, and cautious central bank rhetoric that could delay cuts into 2027. If inflation data accelerate or the won weakens sharply, the position loses.