South Korea cuts interest rates to 2.75 %
The Asian country announced on Tuesday, February 25, the cut in its growth forecast and interest rates to 2.75 %, their lowest level since 2022
Last week, the Bank of South Korea announced a cut in the country’s growth forecasts, as well as a reduction in interest rates to 2.7 % with the intention of boosting the economy in the face of US taxes and dealing with political instability following the arrest of President Yoon Suk Yeol.
South Korea is going through a moment of tension that it intends to alleviate with this measure announced by the central bank on February 25.
According to the regulatory body, “the new growth forecast is 1.5 % of GDP for 2025, four-tenths below the 1.9 % initially forecast. In addition, the reference interest rate will also be reduced from the current 3 % to 2.75 %.”
The announcement quickly generated concern about its possible impact on key aspects, such as the indebtedness of families, incentive for internal spending, which would increase debts.
However, analysts believe that the reduction in interest rates could boost internal demand, which would translate into “a recovery in consumption and investments in key sectors such as construction, which have shown weakness in recent quarters.”
M.Pino
Source: barrons
(Reference image source: Towfiqu barbhuiya on Unsplash)
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