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Bank of Korea to lower interest rates cautiously, minutes show

Published: 17 Jun. 2025, 17:32 Updated: 17 Jun. 2025, 17:52

A view of company offices from Mount Nam in Seoul on March 26 [YONHAP]

Board members of Korea's central bank said it was necessary to continue easing monetary policy to support economic growth, but with caution over associated risks, minutes of their May 29 policy meeting showed on Tuesday.

One member "emphasized the importance of assessing the risks associated with further rate cuts and calibrating the pace accordingly," citing instability in housing prices.

Another member concurred, saying "a well-calibrated policy mix is needed, combining continued monetary easing with focused fiscal and financial measures aimed at supporting the vulnerable sectors".

Members noted that changes in U.S. tariff policies and monetary policy adjustments, as well as domestic economic policies under a new administration, should be considered when determining the extent of any further rate cuts.

Last month, the Bank of Korea lowered interest rates by 25 basis points to 2.50 percent in a unanimous decision, a week before a snap presidential election won by liberal candidate Lee Jae Myung.

Lee, who has argued for expansionary fiscal policy to boost domestic demand, plans to introduce a second supplementary government budget of the year on Thursday, after a 13.8 trillion won ($10.12 billion) budget passed in May.

Reuters