Lowered growth forecasts and global uncertainties push South Korea’s central bank to prioritize stimulus over stability
The Bank of Korea (BOK) cut its benchmark interest rate by 0.25 percentage points to 3.0% on Thursday, marking its second consecutive reduction since October and defying market expectations of a hold. The central bank cited the need to bolster growth amid slowing exports, weakening domestic demand and heightened global uncertainties.
The BOK also lowered its GDP growth forecasts, projecting 2.2% growth in 2024 and 1.9% in 2025, down from earlier estimates of 2.5% and 2.2%, respectively. Officials flagged external risks, including Donald Trump’s reelection as U.S. president, which could trigger protectionist trade policies, a stronger dollar and heightened global financial volatility. Moreover, South Korean consumer and business confidence has also deteriorated.
The Bank of Korea (BOK) cut its benchmark interest rate by 0.25 percentage points to 3.0% on Thursday, marking its second consecutive reduction since October and defying market expectations of a hold. The central bank cited the need to bolster growth amid slowing exports, weakening domestic demand and heightened global uncertainties.
The BOK also lowered its GDP growth forecasts, projecting 2.2% growth in 2024 and 1.9% in 2025, down from earlier estimates of 2.5% and 2.2%, respectively. Officials flagged external risks, including Donald Trump’s reelection as U.S. president, which could trigger protectionist trade policies, a stronger dollar and heightened global financial volatility. Moreover, South Korean consumer and business confidence has also deteriorated.
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