Seoul, South Korea – The Central Bank of South Korea reduced its key interest rate and abruptly lowered its growth perspective for the country’s economy in 2025, since it moved on Thursday to counteract the tariff increases of the president of the United States and the weak domestic demand worsened by recent political agitation.
After a monetary policy meeting, the Bank of Korea reduced its reference interest rate at a percentage point quarter to 2.5%. It was his fourth cut since October, when he began to reduce the costs of loans for the first time in years to support a weakening economy. The bank reduced its growth perspective from 2025 to 0.8%, almost half its previous projection of 1.5% announced in February.
The prices of the shares jumped, with the Kospi winning 1.7%.
Although commercial tensions have decreased recently, the global economy is expected to slowly due to the persistent effects of the increase in rates. The friction between the United States and China on trade and geopolitical uncertainties will continue to weigh in the markets, the bank said in a statement.
The internal economic activity of South Korea remained slow in April after a contraction in the first quarter driven by weak consumption and business investment, the bank said. He said that the creation of jobs in manufacturing and other sectors was slow.
Since his second term began, Trump has promised To slapped huge huge tariffs on foreign products entering the United States, including those of Mexico, Canada and China, which insists that it will create more domestic jobs and reduce the federal deficit.
In recent weeks, South Korea has sent commercial officials to Washington to discuss the commercial measures of the Trump administration, including reciprocal rates and possible specific tariffs of products on semiconductors and cars, which are the main exports for the country -dependent economy.
A decision of a Federal Court of the United States that says that Trump lacks the legal authority to impose such tariffs could alter its plans, but the White House has appealed and it is not clear what will happen longer.
Experts say that the influence of South Korea in commercial conversations and their ability to address national economic challenges have been undermined by political instability after the former president The unfortunate imposition of Yoon Suk Yeol’s martial law In December. Yoon was formally expelled from the position in April, preparing the stage for a presidential election next week.
