Today's labour market data show unemployment low but private sector employment weak. Business confidence should improve after the election, but other data released today for trade in the first 10 days of June show overall exports remaining lacklustre, even as semi exports start to pick up again.

The important detail in today's CPI release for May was the drop in MoM core. Given the weakness of demand – now beginning to show up more clearly in the labour market – that moderation should persist. With global commodity prices weighing on headline, inflation should be less of an issue in 2H25.

The BOK cut rates again to 2.5% on the back of further downgrades to the outlook for growth. That forecast makes further cuts likely, though remarks today suggest a sharpening of the debater within the MPC about the need to boost growth versus the risk of rate cuts just pushing up asset prices.

Despite an improvement in consumer confidence, all-economy sentiment remained weak in May, dragged down by poor confidence in the corporate sector. However, inflation indicators are falling too. Everyone – it seems – expects the BOK to cut tomorrow, and that likely won't be the last in the cycle.

In Taiwan and Japan, rising inflation is eroding consumer confidence. In Korea, by contrast, less domestic uncertainty and lower inflation triggered a bounce in confidence in May. The differing inflation pictures offer a good illustration of why the BOK is cutting, while the BOJ and CBC are not.

Historically, in terms of both savings and inflation, Korea has looked different from the other East Asian economies. But that is now changing. In recent years, Korea has become a clear external creditor, and labour market developments warn of a structural slowdown in inflation.

Unemployment remains low, but wage growth isn't accelerating. The reason is the big structural changes in the labour market of recent years, which have increased the number of part-time jobs. That shift is likely to reduce the bargaining power of labour, and generate a structural slowdown in wages.

Today's 10D May export data were stable, but that won't ease the growth concerns visible in last week's minutes of the BOK April meeting. It seems the member who voted for a cut was weighing more than 25bp. But another member warned against being "bold", saying that monetary easing wasn't working.

Yesterday's export data for April were sluggish, and today's PMI fell to 47.5, the lowest since September 2022. Ongoing political uncertainty won't help a recovery. The BOK expects this weakness to reduce inflation, but that feed through isn't obvious yet, with April core CPI remaining over 2%.