Bank of Korea cuts rates, growth forecast on Trump tariff policy

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The latest forecast is also lower than the monetary authority’s prediction announced last month that the economy was likely to grow 1.6-1.7% this year.The economy expanded 2.0% last year.“Trends in the domestic demand recovery and in export growth are forecast to be lower than previously expected due to deteriorating economic sentiment and due to US tariff policies,” the BOK said in a statement.“It is judged that inflation stabilization has continued, while domestic economic growth is projected to remain low for some time.”South Korean government bond yields fell across the board after the remarks.

Analysts focused more on the possibilities of further cuts than the timing of easing.“The economy is facing more downside than upside risks as the revised forecast reflects expectations of two or three more rate cuts,” said Baek Yoon-min, a fixed-income analyst at Kyobo Securities Co.in a note.“The monetary policy path supports further rate cuts, given inflation and growth,” Baek said, adding that the central bank is expected to lower the policy borrowing costs by 25 bps each in the second and third quarters to 2.25%.

Rhee said the BOK may not rush into further easing, however.“Four out of six monetary policy board members said the policy rate is likely to remain at 2.75% in the next three months as they expressed concerns over rapidly exhausting the room for further rate cuts amid high uncertainties in the domestic and external policy environment,” Rhee told reporters after the rate cut.“The rest two said it is necessary to leave the door open to lower the rate below 2.75% in the next three months.”The policy consists of seven members including Rhee, who chairs the committee.

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Category: Economy

Markets: South KoreaCanadaMexico

Topics: Lower Economy Rate Forecast Central Growth Year Economic Bank South Policy

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Published On: 2025-02-25 @ 17:08:40 (2 hours ago)

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