Bank of Korea, Base interest rate held at 2.75% annually...Growth rate expected to fall below 1.5%

The Bank Of Korea, Which Maintained The Interest Rate At 2.75% Per Year At The Financial Monetary Policy Committee Meeting Held At The Headquarters Of The Bank Of Korea In Jung-gu, Seoul On The 17th (Source: The Bank Of Korea)

The Bank Of Korea Decided To Maintain The Base Interest Rate At The Current Level Of 2.75% Per Year At The Financial Monetary Policy Committee Held On The 17th. Although The Possibility Of Falling Short Of The Annual Growth Rate Of 1.5%, Which Was The Previous Forecast, Has Increased, The Additional Reduction Was Postponed Consideration Of The Factors Such As The Rapid Exchange Rate Volatility And Concerns Over The Re-Expansion Of Household Debt.

The Bank Of Korea Explained Through Its Monetary Policy Direction Statement That "The Domestic Economy Was More Sluggish Than Expected In The First Quarter, And The Downward Pressure On Growth Has Increased Due To The Deterioration Of Global Trade Conditions." However, It Cautioned That The Impact Of External Variables, Such As Changes In The U.S. Tariff Policy And Whether The Government Pursues Economic Stimulus Measures, Remains Uncertain, And Highlighted The Need To Carefully Monitor The Flow Of Exchange Rates And Household Debt.

In Fact, The Foreign Exchange Market Has Recently Been Volatile, Repeatedly Experiencing Large Fluctuations. The Won-Dollar Exchange Rate Has Been Swinging Wildly Due To U.S. Tariff Measures, China's Responses, And The Inflow And Outflow Of Securities Investment Funds. The Exchange Rate, Which Surpassed The 1470 Won Level Just A Few Days Ago, Fell To The 1410 Won Level On This Day, Continuing Its Unstable Path.

In This Situation, Further Reducing The Base Interest Rate Could Widen The Interest Rate Gap With The U.S., Intensifying Foreign Capital Outflows And Weakening The Won, Which Are Considered Burdensome. Additionally, The Recent Increase In Housing Transactions In The Seoul Area Is Stimulating Household Loans, Making Concerns About The Expansion Of Real Estate-Induced Loans Difficult To Ignore.

The Bank Of Korea Stated That "The Possibility Of This Year's Growth Rate Falling Below The February Forecast Of 1.5% Is High." This Is Already A Revised Figure From The 1.9% Forecast At The End Of Last Year. It Is Assessed That Political Uncertainty, Export Slowdown, And Weak Domestic Demand Are All Simultaneously Having An Impact. It Particularly Considers That Export Improvement Will Be Difficult As Long As Trade Conditions Remain Uncertain.

Regarding Future Monetary Policy, The Bank Of Korea Indicated That "The Policy of Maintaining A Rate Cut Stance Will Continue To Mitigate Downside Risks To Growth, But The Timing And Extent Of The Cut Will Be Carefully Determined By Comprehensive Assessment Of Prices, Exchange Rates, And Household Debt Trends."

While The Pressure To Cut The Base Interest Rate Is Expected To Persist, The Bank Of Korea Appears To Intend To Continue Its Gradual Approach While Defending Against Financial Instability Factors Caused By External Shocks.