Minutes released on Tuesday revealed that South Korea’s central bank officials emphasized the importance of taking swift and proactive measures to address the decelerating economy, leading to the decision to cut interest rates on November 28th.
The urgency to take preemptive measures in response to economic downward pressure was underscored by one member. Furthermore, the necessity for coordinated action between monetary and fiscal policies was also emphasized following the recognition that rate cuts alone might not be adequate to mitigate prevailing risks.
Another member highlighted the significance of closely analyzing economic shocks amid elevated domestic and global uncertainties to facilitate a timely and flexible policy response.
In the previous month, the Bank of Korea’s board voted 5-2 in favor of a 25 basis points rate cut to 3.00%, marking the first successive rate reduction since 2009, deviating from market expectations for the central bank to maintain its benchmark rates.
Meanwhile, dissenting members recommended a cautious approach, advocating for a thorough assessment of the implications of Donald Trump’s election victory in the U.S. and its impact on the foreign exchange market before implementing any changes.
The Bank of Korea’s latest projections indicate a gradual deceleration in South Korea’s economic growth, with estimates of 1.9% in 2025 and 1.8% in 2026, down from 2.2% in 2024.
