Interest Rate Decisions in Korea, Turkey and Ukraine Today Were As Expected – Currency Thoughts
Interest Rate Decisions in Korea, Turkey and Ukraine Today Were As Expected
October 23, 2025
While a planned meeting between President Trump and Xi next week in South Korea is back on schedule, the get-together between Trump and Putin planned for Budapest remains canceled due to Russia’s intransigence against negotiating an end to the war with Russia. The United States and European Union have meanwhile extended economic sanctions against Russia, and those actions have been associated with a 5.4% jump in the price of West Texas Intermediate oil so far today. Prices of gold (+1.4%) and Bitcoin (+1.8%) are more elevated today as well.
The weighted DXY dollar index has edged 0.2% higher. The U.S. currency strengthened 0.5% against the yen and has also matched that advance versus the South Korean won, which is trading around its lowest value in a half year. Although the Bank of Korea‘s Base Rate was left unchanged at 2.5% as analysts were anticipating. South Korean CPI inflation of 2.1% was close to the 2% target, and the interest rate had previously been sliced four times by 25 basis points each between October 2025 and this past May. The released statement explains explains the subsequent pause but retains a rate-cutting stance.
Regarding future monetary policy, the Board considers it is necessary to continue its rate cut stance, in the view of prevailing economic conditions. However, given that risks to the growth outlook have increased in both upside and downside, and financial stability risks have also heightened, the Board will determine the timing and the size of any further cuts in the Base Rate based on incoming economic data.
Other dollar advances today amount to 0.3% relative to the Swiss franc, 0.2% against the euro and 0.1% vis-a-vis sterling.
Ten-year sovereign debt yields this Thursday have climbed four basis points in the United States, three bps in Japan, two bps in Germany, France, Italy and Spain, and a single basis point in Great Britain. In stock market action today, Japan’s Nikkei and the South Korean won dropped by 1.4% and 1.0%. The German DAX thus far is modestly lower but the indices of France, Spain, Italy and U.K. are flashing green. In pre-open futures trading, small cap stocks summarized in the Russell 2000 are up 0.4%, whereas as the DOW, Nasdaq and SPX have minimal overnight changes.
A one-percentage point reduction of the Central Bank of Turkey‘s 1-week repo rate to 39.5% today is also aligned with market expectations. The rate had been as high as 50% from March 2024 though January of this year. But today’s rate drop was smaller than ones of 250 basis points last month and 300 bps in July. Turkish CPI inflation last month printed at a higher-than-forecast 33.3%, and officials reacted to other unwelcome developments.
While recent data suggest that demand conditions are at disinflationary levels, they also point to a slowdown in the disinflation process. The risks posed by recent price developments, particularly in food, to the disinflation process through inflation expectations and pricing behavior have become more pronounced.
Ukraine’s war continues to depress economic growth and the pace of disinflation. CPI inflation had decelerated from 26.6% in December 2022 to 3.2% by April 2024 but revved back up to a peak of 15.9% this past May and was still in double digits at 11.9% last month. The interest rate is well below the 25% emergency crest that had prevailed from March 2024 until January 2025. But explaining today’s decision to leave the National Bank of Ukraine‘s policy interest rate unchanged at 15.5% today, monetary officials defended the need for keeping such well above inflation:
In order to maintain the attractiveness of hryvnia assets, the sustainability of the FX market, and the steady decline in inflation toward the 5% target over the policy horizon, the NBU will stick to relatively tight monetary conditions.
French business confidence this month brightened a bit, rising from 0.9 index points to a 6-month high of 96.7 but remaining below its long-term average reading of 100. A 19-month manufacturing high of 100.7 and a 6.6-point leap in the retail and trade sub-index to 98.6 powered the improvement, mitigating the drop of a 2.2-point decline in services to a 5-month low reading of 95.5. The labor market subindex went up, too, but was still in gloomy territory.
Reported measures of consumer sentiment today included a 10-month high but still sub-zero reading in the Netherlands, a 31-month low in Denmark, a 3-month low in Turkey, and an unchanged reading for Slovenia that matched September’s 4-month high.
Consumer price inflation in Singapore accelerated a little to a still very low 0.7% in September, down from the 2022 peak of 7.5%.
In Hong Kong, CPI inflation last month matched August’s level and was just slightly above the 49-month low of 1.0% in July.
Russian producer price inflation, which had been as high as 21.9% in November 2023, was negative 0.4% last month.
Taiwanese industrial production exceeded its year-earlier level by 15.5% last month, reflecting the strength of the AI sector, but retail sales was down 2.2% year-on-year in the same month.
Hard times have come to Britain. The orders component of the Confederation of British industries’ monthly survey of industrial trends tumbled to a 10-month low of -38 this month from -27 in September. Such had been as high as -9 in September 2023 and +26 in May 2022.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea, Central Bank of Turkey, French business confidence, National Bank of Ukraine
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