UK interest rate hike hesitant to cut tax rates, exchange rate plunges, Korea 'follows' the interest rate reversal

The yield on 10-year Treasury bonds rose more than 4% for the first time since 2010 due to the UK's conservative tax cut policy, where the exchange rate is falling.
Bloomberg predicted on the 27th that the interest rate in the UK is expected to rise to 6% next year, and the average household repayment amount in the first half of next year refinancing a two-year fixed mortgage loan at 6% at an interest rate of 6% is 1490 pounds, which is a 72.65% increase from this year's 863 pounds.
In the UK, the Bank of England raised the rate to 2.25% from 1.75% to 2.25% to cope with high inflation and US interest rate hikes on the 23rd.
Rabobank strategist Jane Foley said, “What drove the market to the extreme is probably a lack of confidence in financial responsibility. The announcement is a prime example,” he told Bloomberg.
Bank of Korea Governor Chang-yong Lee took office in May early in May, saying, “Even if interest rates are reversed with the US, there will be no capital outflow.”
The US benchmark interest rate is between 3.0 and 3.25%, and the Fed is expected to raise it to 4.5% by the end of the year.
In Korea, even if the base rate is raised to 2.75% by the end of the year, the gap with the US is expected to remain more than 1%, so the Bank of Korea seems to have missed the timing of the rate hike.
<See Powell’s ‘Big Step’ vs. Lee Chang-yong’s ‘0.25 Gossip No Capital Outflow’, August 27, 2022>
"Everyone has hopes that the dollar has peaked and is peaking again, but it's too immature," said Paul McKell, global research director at HSBC. We're bringing those forces together. It's all pointing to a strong dollar," he told Reuters on the 27th.
As mid-term fundamentals still favor Greenback on the day, the dollar undoubtedly stopped rising despite the euro and JPY and British pound recovering slightly.
"Further rate hikes by the Bank of England could temporarily boost the pound, but not by sustainable standards," said Qi Gao, currency strategist at Scotia Bank in Singapore.
The conservative economic policy of the British Conservative Party followed Thatcherism and used tax cuts to induce investment expansion, but the pound fell sharply.
The Republican Republican Party's Reagannomics and Thatcherism, the hard-line conservative charioteer of the 1980s, put forward the Rapper curve to promote investment in tax cuts, but failed to measure the appropriate line for tax cuts at the time and were dismissed as 'political propaganda'.
The Yoon Seok-yeol system adopted the strategy of expanding supply through the US tax cut policies of Reaganomics and Thatcherism, and the Bank of Korea attempted to reverse interest rates with the US as the interest rate continued to be low.