Bank of Korea to Further Reduce Interest Rates Next Year Amid Rising Risks
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Seoul, Dec 25 (NationPress) The central bank of South Korea indicated on Wednesday that it intends to reduce its benchmark interest rate again next year due to an increase in political uncertainties and various downside risks.
In its monetary policy report for 2025, the Bank of Korea (BOK) stated that it will pursue additional rate cuts to maintain a moderating trend in inflation growth and to alleviate economic risks, according to a report by Yonhap news agency.
The BOK has noted that it will consider heightened political uncertainties, intensified competition (with global competitors) in significant industries, and anticipated changes in the global trading environment when making decisions regarding rates.
Furthermore, the central bank plans to enhance its early warning capabilities to prevent any fluctuations in financial markets amid uncertainties related to geopolitical risks and economic policies stemming from the new Donald Trump administration.
The bank also committed to deploying market stabilization measures promptly if necessary.
Last month, the BOK unexpectedly lowered its policy rate for the second consecutive time to support the economy.
The bank decreased its key rate by 25 basis points to 3 percent, marking the first consecutive rate cut since February 2009, following the global financial crisis.
In October, it had already cut the rate by 25 basis points to 3.25 percent, marking the first shift in more than three years.
Consumer prices, a crucial indicator of inflation, decelerated to the lowest point in 45 months in October, rising just 1.3 percent year-on-year, remaining below 2 percent for the second straight month.
