The South Korean Won was a notch firmer against the US Dollar on Thursday, after the Bank of Korea left its base rate without change at a 15-year high of 3.5% at its July policy meeting.

This way, borrowing costs were kept on hold for the twelfth consecutive meeting, as policy makers required more time to assess a slowdown in inflation and consider the impact of volatility in Forex markets, housing prices in Seoul and persistently high household debt.

Short-term inflation expectations have decreased to 3%, policy makers stated, while the annual CPI inflation has eased to an 11-month low of 2.4% in June.

The Bank of Korea “will examine the timing of a rate cut,” it said in a statement.

“Given the underlying uncertainties regarding the future path of inflation, however, it is necessary to further assess whether inflation will continue its slowing trend,” the BoK said.

According to ING analysts, the Bank of Korea’s statement indicated a dovish shift in monetary policy.

“Given the confidence in the slowdown in inflation, the market’s view on rate cuts is likely to strengthen for now,” ING analysts wrote in an investor note.

A rate cut in October remains a possibility, they added.

US CPI inflation numbers eyed as Fed’s Powell delivers somewhat dovish hints

Meanwhile, remarks by Federal Reserve Chair Jerome Powell added to market expectations of interest rate cuts.

The Federal Reserve Chair told Congress that inflation could not yet be considered beaten, but the US economy remained on a path back to stable prices and continued low unemployment.

Powell also said that “more good data” would build the case for a rate cut.

Markets are now pricing in about a 70% chance of a Fed rate cut occurring in September, according to the CME FedWatch tool.

Market players are now expecting the latest US CPI data prints due out at 12:30 GMT.

Annual headline consumer inflation in the United States probably eased to 3.1% in June, according to market consensus, from 3.3% in May.

Annual core CPI inflation probably steadied at an over three-year low of 3.4% in June.

As of 8:01 GMT on Thursday the USD/KRW currency pair was edging down 0.26% to trade at 1,379.28.

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