South Korea: BOK to Further Reduce Interest Rates Next Year Amid Rising Risks
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Seoul, Dec 25 (NationPress) South Korea's central bank indicated on Wednesday that it is poised to reduce its benchmark interest rate further next year, driven by escalating political uncertainties and other downside risks.
In its monetary policy report for 2025, the Bank of Korea (BOK) stated that it would pursue additional rate cuts to sustain the moderating growth of inflation and to alleviate downside risks facing the economy, as reported by the Yonhap news agency.
The BOK noted, "We will take into account the rise in political uncertainties, increasing competition with global rivals in key industries, and anticipated shifts in the global trading landscape when determining rate policies," according to the report.
The central bank also plans to enhance its early warning mechanisms to prevent potential financial market volatility amid uncertainties related to geopolitical risks and economic strategies in the new Trump administration.
Furthermore, the bank committed to timely implementing market stabilization measures if necessary.
Last month, the BOK unexpectedly reduced its policy rate for the second consecutive time to support the economy.
It lowered its key rate by 25 basis points to 3 percent, marking the first instance of back-to-back rate cuts since February 2009, during which the country was grappling with the repercussions of the global financial crisis.
In October, the BOK had already cut the rate by 25 basis points to 3.25 percent, representing the first major shift in over three years.
Consumer prices, a primary indicator of inflation, decelerated to their lowest point in 45 months in October, rising only 1.3 percent year-on-year, and remaining below 2 percent for the second straight month.
