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Bank of Korea Holds Rates Steady, Signals May Cuts Amid Economic Uncertainty

The central bank maintained its 2.75% rate to stabilize the won, while flagging significant risks from U.S. tariffs and domestic political instability.

The logo of the Bank of Korea is seen in Seoul, South Korea, November 30, 2017. REUTERS/Kim Hong-Ji/File Photo
Lee Jae-myung, former leader of the liberal Democratic Party, speaks during a ceremony pledging a clean election campaign held at the National Assembly in Seoul on April 16, 2025. (Yonhap)
Bank of Korea Gov. Rhee Chang-yong (C) presides over a Monetary Policy Committee meeting at the central bank in Seoul on April 17, 2025. (Pool photo) (Yonhap)
Bank of Korea (BOK) Gov. Rhee Chang-yong bangs the gavel to open a Monetary Policy Committee meeting at the central bank in Seoul on April 17, 2025. (Pool photo) (Yonhap)

Overview

  • The Bank of Korea (BOK) kept its benchmark interest rate at 2.75% on April 17, prioritizing currency stability as the won remains volatile against the U.S. dollar.
  • Governor Rhee Chang-yong indicated that rate cuts are likely in May, with all Monetary Policy Board members open to easing within the next three months.
  • South Korea’s 2025 GDP growth forecast is expected to be revised below the February projection of 1.5%, reflecting trade tensions and sluggish domestic demand.
  • The U.S. imposed 25% tariffs on South Korean exports, temporarily suspended for 90 days, exacerbating economic pressures on the export-driven economy.
  • Finance Minister Choi Sang-mok is negotiating with Washington to delay tariff implementation, while the government drafts a supplementary budget to support growth.