On Thursday, South Korea’s central bank lowered its key policy rate for the second month, citing slower-than-expected economic growth.

The Bank of Korea cut its benchmark interest rate by 0.25 percentage points to 3%, marking the second consecutive month of rate cuts.

The bank revised its economic growth forecast to 2.2% for 2024 and 1.9% for 2025, citing slower growth.

Despite high inflation and household debt concerns, the bank is reducing borrowing costs to support the economy.

The rate cut follows a similar 0.25 percentage point reduction in October, the first since May 2020 during the COVID-19 pandemic.

The bank pointed to uncertainties in global economic trends, inflation, and the impact of U.S. policies and geopolitical conflicts on South Korea’s trade-dependent economy.

Since winning reelection, Trump has pledged to impose heavy new tariffs on foreign products, including those from Mexico, Canada, and China, to create jobs and reduce the federal deficit.

The Bank of Korea noted that South Korea’s economy is losing momentum due to weak domestic consumption, slowing exports, and falling employment.

The bank expects a mild recovery in domestic consumption but a weaker-than-expected export recovery due to rising competition and stronger protectionist trade policies in key industries.

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