People wearing face masks walk by the headquarters of the Bank of Korea in Seoul, South Korea, Thursday, May 28, 2020.
South Korean Democratic Party’s presidential candidate Lee Jae-myung, center, reacts as he leaves after casting his early vote for the June 3 presidential election near a polling station in Seoul, South Korea, Thursday, May 29, 2025.
South Korean President Yoon Suk Yeol speaks at the presidential office in Seoul, South Korea, on Dec.
(South Korean Presidential Office/Yonhap via, File).
SEOUL, South Korea () — South Korea’s central bank cut its key interest rate and sharply lowered its growth outlook for the country’s economy in 2025, as it moved Thursday to counter U.S.
President Donald Trump’s tariff hikes and weak domestic demand worsened by recent political turmoil.
Following a monetary policy meeting, the Bank of Korea cut its benchmark interest rate by a quarter percentage point to 2.5%.
It was its fourth cut since October, when it began lowering borrowing costs for the first time in years to support a weakening economy.
The bank slashed its 2025 growth outlook to 0.8%, nearly halving its previous projection of 1.5% announced in February.
Although trade tensions have recently eased, the global economy is still expected to slow due to the lingering effects of increased tariffs.
U.S.-China friction over trade and geopolitical uncertainties will continue to weigh on markets, the bank said in a statement.
South Korea’s domestic economic activity remained sluggish in April following a contraction in the first quarter driven by weak consumption and business investment, the bank said.
It said job creation in manufacturing and other sectors was slow.
For markets and businesses, the practical impact depends on final numbers, regulatory filings, company disclosures and broader investor sentiment once the trading day or reporting cycle is complete.
