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Bank of Korea Makes Surprise Interest Rate Cut, Warns Of Trade Risks

Writer: By The Financial DistrictBy The Financial District

The Bank of Korea (BOK) has surprised markets by delivering its second consecutive interest rate cut, slashing the benchmark rate to 3% amid faltering economic growth and rising global trade uncertainties, Cynthia Kim and Jihoon Lee reported for Reuters.


The Bank of Korea's decision marks the first back-to-back rate cuts since 2009 as South Korea, Asia’s fourth-largest economy, grapples with external pressures. I Photo: Bank of Korea Linkedin



Only four out of 38 economists polled foresaw the move. The BOK board voted 5-2 in favor of the cut, and Governor Rhee Chang-yong hinted at further easing in the coming months, citing heightened risks to South Korea’s export-driven economy following Donald Trump’s re-election.


“Export competition is intensifying, and uncertainties about trade policies under Trump’s presidency remain significant,” Rhee said in a press briefing.



This marks the first back-to-back rate cuts since 2009 as South Korea, Asia’s fourth-largest economy, grapples with external pressures.


In particular, concerns are growing over the potential imposition of up to 60% tariffs on Chinese goods, which could indirectly affect South Korea.


South Korea posted a record $44.4 billion trade surplus with the US in 2023, making the nation vulnerable to Trump’s tariff policies. Safeguarding critical industries, including semiconductors, is now a priority for policymakers to sustain growth.




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