{"id":2207304,"date":"2024-11-29T08:00:41","date_gmt":"2024-11-28T23:00:41","guid":{"rendered":"https:\/\/koreapro.org\/?p=2207304"},"modified":"2024-11-28T16:23:10","modified_gmt":"2024-11-28T07:23:10","slug":"economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/","title":{"rendered":"Economic slowdown drives Bank of Korea to surprise second rate cut"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Bank of Korea (BOK) <\/span><a href=\"https:\/\/www.bok.or.kr\/portal\/bbs\/P0000559\/view.do?nttId=10088270&amp;searchCnd=1&amp;searchKwd=&amp;depth2=200038&amp;depth3=201263&amp;depth=201263&amp;pageUnit=10&amp;pageIndex=1&amp;programType=newsData&amp;menuNo=200690&amp;oldMenuNo=201263\"><span style=\"font-weight: 400;\">cut its benchmark interest rate<\/span><\/a><span style=\"font-weight: 400;\"> by 0.25 percentage points to 3.0% on Thursday, marking its second consecutive reduction since <\/span><a href=\"https:\/\/koreapro.org\/2024\/10\/south-koreas-central-bank-cuts-interest-rates-to-boost-economy-and-exports\/\"><span style=\"font-weight: 400;\">October<\/span><\/a><span style=\"font-weight: 400;\"> 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.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">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\u2019s reelection as U.S. president, which could trigger protectionist trade policies, a stronger dollar and heightened global financial volatility. Moreover, South Korean <\/span><a href=\"https:\/\/koreapro.org\/2024\/11\/south-koreas-economic-vulnerability-rises-amid-worsening-business-confidence\/\"><span style=\"font-weight: 400;\">consumer and business confidence<\/span><\/a><span style=\"font-weight: 400;\"> has also deteriorated.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The BOK\u2019s unexpected rate cut reflects the mounting pressure on South Korea\u2019s policymakers to shield the economy. While exports hit a <\/span><a href=\"https:\/\/koreapro.org\/2024\/11\/south-koreas-exports-hit-all-time-high-as-external-challenges-intensify\/\"><span style=\"font-weight: 400;\">record high in October<\/span><\/a><span style=\"font-weight: 400;\">, they have been insufficient in offsetting persistently weak domestic consumption and investment. By easing monetary policy, the BOK likely seeks to prevent a sharper slowdown, but this comes as government-led structural measures, such as investments in the <\/span><a href=\"https:\/\/www.moef.go.kr\/nw\/nes\/detailNesDtaView.do?searchBbsId1=MOSFBBS_000000000028&amp;searchNttId1=MOSF_000000000071481&amp;menuNo=4010100\"><span style=\"font-weight: 400;\">semiconductor sector<\/span><\/a><span style=\"font-weight: 400;\">, are unlikely to deliver immediate results.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the rate cut widens South Korea\u2019s interest rate gap with the U.S., where the federal funds rate stands at <\/span><a href=\"https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/monetary20241107a.htm\"><span style=\"font-weight: 400;\">4.50% to 4.75%<\/span><\/a><span style=\"font-weight: 400;\">. This gap, coupled with the won\u2019s <\/span><a href=\"https:\/\/www.news1.kr\/economy\/trend\/5602604\"><span style=\"font-weight: 400;\">recent depreciation<\/span><\/a><span style=\"font-weight: 400;\"> against the dollar, raises the risk of capital outflows and further weakening of the currency. A weaker currency may amplify import costs and inflation risks, especially as energy comprises a significant portion of South Korea\u2019s imports. Additionally, Trump\u2019s proposed tariffs and the potential for a stronger dollar threaten to disrupt South Korea\u2019s exports, particularly in semiconductors and electronics.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The effectiveness of the BOK\u2019s move remains uncertain. Lower borrowing costs may offer short-term relief, but weak consumer sentiment and deteriorating business confidence could limit its impact on spending and investment. If external risks such as trade disruptions intensify, the BOK may face pressure to adopt further rate cuts or lean more heavily on fiscal measures, increasing the risk of over-reliance on monetary easing.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>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 [&hellip;]<\/p>\n","protected":false},"author":5770,"featured_media":2206006,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2207304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Economic slowdown drives Bank of Korea to surprise second rate cut - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economic slowdown drives Bank of Korea to surprise second rate cut - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"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 [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\" \/>\n<meta property=\"og:site_name\" content=\"KOREA PRO\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/nknewsorg\/\" \/>\n<meta property=\"article:published_time\" content=\"2024-11-28T23:00:41+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-11-28T07:23:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/assets.korearisk.com\/uploads\/sites\/6\/2024\/08\/1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1870\" \/>\n\t<meta property=\"og:image:height\" content=\"1000\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Jeongmin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@southkoreapro\" \/>\n<meta name=\"twitter:site\" content=\"@southkoreapro\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"KOREA PRO\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\"},\"author\":{\"name\":\"Jeongmin\",\"@id\":\"https:\/\/koreapro.org\/#\/schema\/person\/66a3b705c65f3c50916a5c126f8a718c\"},\"headline\":\"Economic slowdown drives Bank of Korea to surprise second rate cut\",\"datePublished\":\"2024-11-28T23:00:41+00:00\",\"dateModified\":\"2024-11-28T07:23:10+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\"},\"wordCount\":350,\"publisher\":{\"@id\":\"https:\/\/koreapro.org\/#organization\"},\"image\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/assets.korearisk.com\/uploads\/sites\/6\/2024\/08\/1.png\",\"keywords\":[\"Business &amp; Economy\"],\"articleSection\":[\"Briefings\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\",\"url\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\",\"name\":\"Economic slowdown drives Bank of Korea to surprise second rate cut - KOREA PRO\",\"isPartOf\":{\"@id\":\"https:\/\/koreapro.org\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/assets.korearisk.com\/uploads\/sites\/6\/2024\/08\/1.png\",\"datePublished\":\"2024-11-28T23:00:41+00:00\",\"dateModified\":\"2024-11-28T07:23:10+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#primaryimage\",\"url\":\"https:\/\/assets.korearisk.com\/uploads\/sites\/6\/2024\/08\/1.png\",\"contentUrl\":\"https:\/\/assets.korearisk.com\/uploads\/sites\/6\/2024\/08\/1.png\",\"width\":1870,\"height\":1000,\"caption\":\"Bank of Korea, July 26, 2024 | Image: Korea Pro\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/koreapro.org\/2024\/11\/economic-slowdown-drives-bank-of-korea-to-surprise-second-rate-cut\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/koreapro.org\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Economic slowdown drives Bank of Korea to surprise second rate cut\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/koreapro.org\/#website\",\"url\":\"https:\/\/koreapro.org\/\",\"name\":\"KOREA PRO\",\"description\":\"Be smart about South Korea. 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