The Bank of Korea announced a reduction in its benchmark interest rate by a quarter percentage point on Tuesday, aligning with market expectations. The decision, made on February 25, 2025, brings the new interest rate to 2.75%, down from the previous 3.00%. This move was largely anticipated by economists, as 36 experts polled by Reuters predicted a similar decrease of 25 basis points, with only one economist dissenting.
This latest adjustment marks the second consecutive rate cut following similar actions in October and November 2024, a sequence not seen since 2009. The Bank of Korea's decision comes amidst forecasts of weak growth for Asia's fourth-largest economy, prompting action to stimulate economic activity.
The interest rate cut is part of the central bank's broader strategy to support and invigorate the economy. The Bank of Korea aims to foster favorable conditions for economic recovery as projections indicate potential stagnation in growth. By reducing borrowing costs, the central bank seeks to encourage investment and spending, providing a much-needed boost to the national economy.
Economists widely anticipated the quarter percentage point cut, reflecting a consensus that easing monetary policy was necessary to counteract the sluggish economic outlook. The central bank's decision underscores its commitment to maintaining economic stability and supporting growth through strategic interventions.
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