SEOUL, South Korea— The central bank of South Korea cut its key policy rate for a second consecutive month and said that the nation’s economy will develop at a slower rate than first projected.
The Bank of Korea dropped its benchmark interest rate by a quarter percent point to 3% after a policy meeting. From 2.4% for this year to 1.9% from 2.1% for 2025, the bank revised its estimate for the national economic growth to 2.2%.
As the economy stumbles, the bank is acting to reduce borrowing rates despite the residual consequences of rising inflation and concerning degrees of family debt.
In October, the bank lowered its policy rate by a quarter percentage point to 3.25% in its first rate reduction since May 2020, right in the middle of the COVID-19 epidemic. :
The bank added that actions of President-elect Donald Trump and continuous geopolitical disputes could affect the trade-dependent economy of the nation by influencing inflation and increasing uncertainty in global economic trends.
Trump has promised to impose massive additional taxes on foreign goods entering the United States, particularly those from Mexico, Canada, and China, which he says will generate more American employment and help to down the government debt since he was elected.
Bank of Korea Governor Rhee Chang Yong said in a news conference that the bank had to make a tough choice over whether to cut the rate or freeze it. But the needle moved with a larger-than-expected drop in exports during the last quarter and Trump’s election victory.
”We had been thinking about the uncertainty the outcomes of the U.S. presidential election might bring, but we did not expect a “red sweep” whereby the House and Senate were all won by one side,” Rhee said.
