Overview

• The central bank lowered its key interest rate by 25 basis points to 2.5%, marking its fourth reduction since October 2024.
• The Bank of Korea sharply revised its 2025 GDP growth forecast to 0.8% from a February outlook of 1.5%.
• South Korea’s economy contracted by 0.2% in the first quarter, the first quarterly decline in nine months.
• Seoul and Washington are negotiating a “July package” on tariffs and economic cooperation to be agreed by the July 8 deadline.
• Inflation has remained near the 2% target, providing scope for further monetary easing if growth momentum fails to recover.