SEOUL, South Korea – On Thursday, the central bank of South Korea announced a reduction in its key policy interest rate for the second consecutive month, revealing concerns regarding a slower-than-expected growth trajectory for the national economy.

After a recent monetary policy meeting, the Bank of Korea decided to lower the benchmark interest rate by 25 basis points to 3%. In conjunction with this decision, the bank revised its economic growth forecasts, decreasing the 2024 projection from 2.4% to 2.2%, and the 2025 projection from 2.1% to 1.9%.

This marks the second month of actions aimed at reducing borrowing costs and increasing the money supply, amidst ongoing challenges such as persistent inflationary pressures and high levels of household debt. These measures are implemented due to rising worries over a weakening economic backdrop.

In October, the Bank of Korea had previously slashed its policy rate from 3.25% to 3%, marking its first cut since May 2020, a period when the economy faced significant difficulties due to the COVID-19 pandemic.

The bank pointed out that South Korea’s trade-reliant economy is grappling with growing uncertainties stemming from global economic trends and inflation, noting that these factors may be influenced by the administration of the newly re-elected U.S. President Trump and ongoing geopolitical tensions.

After his reelection, Trump has pledged to impose substantial tariffs on a variety of foreign imports, including those from Canada, Mexico, and China, asserting that this will enhance job creation domestically and help reduce the federal deficit.

According to the Bank of Korea, the South Korean economy is currently losing its growth momentum as a result of subdued domestic demand, a decline in exports, and dwindling employment opportunities.

In its statement, the bank indicated that while there may be a slight recovery in domestic consumption, the anticipated rebound in exports is expected to be weaker than earlier forecasts due to increasing competitiveness and the rise of protectionist trade measures within key sectors.