South Korea’s central bank lowered its key policy rate for the second consecutive month on Thursday and said the country’s economy will grow slower than initially estimated.
Following a meeting of its monetary policymakers, the Bank of Korea cut its benchmark interest rate by a quarter percentage point to 3 percent. The bank cut its outlook for the country’s economic growth for 2024 to 2.2 percent from 2.4 percent and for 2025 from 2.1 percent to 1.9 percent.
It was the second month in a row that the Bank took steps to lower borrowing costs and expand the money supply, despite the lingering effects of higher inflation. inflation and worrying levels of household debt, as concerns grow over a faltering economy.
The bank cut its policy rate by a quarter percentage point to 3.25 percent in October, its first rate cut since May 2020, when the economy was reeling from the crisis. COVID-19 pandemic.
The country’s trade-dependent economy faces growing uncertainties in global economic trends and inflation, which the bank said could be affected by the policies of the new US government. donald trump and ongoing geopolitical conflicts.
Since winning re-election, Trump vows to impose huge new tariffs on foreign products Those entering the United States, including those from Mexico, Canada and China, say it would create more domestic jobs and reduce the federal deficit.
The Bank of Korea said South Korea’s economy is losing its growth momentum amid weak domestic consumption, slowing exports and declining employment.
“Going forward, domestic consumption will see a modest recovery, but the recovery in exports is likely to be weaker than initially anticipated due to increased competition and the strengthening of protectionist trade policies in key industries,” the bank said in a statement.