The Bank of Korea (BOK) cut its benchmark interest rate by 25 basis points to 2.50% on Thursday, citing weakening growth and easing inflationary pressure. The central bank also lowered the interest rate on its Bank Intermediated Lending Support program from 1.25% to 1.00%, effective immediately.

In its policy statement, the BOK revised its 2025 GDP growth forecast down to 0.8%, a sharp downgrade from its February estimate of 1.5%. The forecast downgrade reflects the Korea Development Institute’s (KDI) move two weeks ago. While acknowledging that household lending and foreign exchange volatility remain elevated, the board determined that disinflationary trends and sluggish domestic demand, particularly in consumption and exports, warranted additional monetary support.