By Cynthia Kim
SEOUL- South Korea’s central bank delivered a surprise interest rate cut on Thursday and signaled more to come, as economic growth faltered and policymakers turned a wary eye to trade risks from a second Donald Trump presidency.
The Bank of Korea cut benchmark interest rates for a second straight meeting to 3.00 percent, an outcome only four of 38 economists polled by Reuters foresaw. The bank’s seven-member board voted five-two for the cut.
Governor Rhee Chang-yong said three board members were open to further easing in the next three months as the return of former president Trump clouds the outlook for South Korea’s export-reliant economy.
“Exports competition with major countries looks to be intensifying while we also took note of uncertainties ahead on the trade environment after Trump’s election victory,” Governor Rhee said in a news conference after the decision.
Thursday’s rate cut was the first back-to-back rate cut since early 2009 as policymakers sought to revive growth now that inflationary pressures seem to have come under control.
Asia’s fourth-largest economy faces risks of higher tariffs while it’s biggest trading partner China could potentially face tariffs of up to 60 percent.
South Korea registered a record trade surplus of $44.4 billion with the US in 2023, bigger than that for any of its other trading partners. – Reuters
