The Korean bank reduces rates to the lowest since August 2022 on economic concerns, cuts the growth forecast

South Korea Central Bank cut rates In 25 basic points on Tuesday to its lowest point since August 2022, since it strives to stimulate a deceleration economy.

The Korea Bank reduced rates to 2.75% of 3%, in line with the expectations of economists surveyed by Reuters, cutting them for the third time in four meetings.

The Central Bank said the decision was made to mitigate the downward pressure on the economy, forecasting growth to “decrease significantly.”

BOK reduced its growth perspective from 2025 to 1.5% of 1.9% prognosis in November, saying that it is likely that the recovery of domestic demand and export growth are lower than expected due to the deterioration of economic feeling and US Tariff Policies.

He acknowledged that there are still concerns about currency markets, but additional inflation had stabilized while the growth of household debt had slowed down.

The Bok maintained its inflation prognosis of 1.9% by 2025, while the central inflation perspective was reduced to 1.8% of 1.9% in November.

The decision occurs when South Korea continues to deal with the political uncertainty about the political trial of President Yoon Suk Yeol.

The Constitutional Court of the country convener for the final hearing of Yoon’s trial Tuesday, according to national media.

Immediately after the rate of rate, the country’s reference point Kospi The Actions Index fell 0.46%, while South Korea cattle weakened 0.2% to operate 1,431.3 against the US dollar.

Talking to CNBC “Squawk Box Asia“, Alex Holmes, Asia Research Director of the Economist Intelligence Unit, said he hopes that the BOK will reduce rates faster instead of slower.

The BOK initially had concerns about financial stability, especially about reheating real estate market and household debtBut after the Flip-Flop of the martial law by Yoon in December, the feeling of consumers and commercials in South Korea sank, changing the “balance of risk” towards the economy, Holmes said.

“Now there will be concern to support economics and inflation, and these concerns about household debt will probably take a kind of rear seat,” he added.

South Korea GDP Growth in the fourth quarter Lost expectations, calculating its slowest expansion in six quarters with 1.2%, according to early estimates. The Bok attributed the slowdown to weakness in the consumer and construction sectors.

The expansion of the distribution rate between the US dollar and the South Korean Won has not seen a significant exit of bond capital, Citi said in a note earlier this month, which sees a “limited negative impact” of weakness in the gain South Korea in the country’s gain. Financial industry and foreign capital flows.

Min Joo Kang, a senior economist from South Korea and Japan in ING, said in a note last week that political agitation in Seoul that triggered excessive weakness in South Korean cattle has decreased.

He also said that inflation would remain within the target range of 2% of the Bok this year, which will give it more space to reduce rates amid threats of reciprocal tariffs of the Trump administration. South Korea Inflation in January It rose to a maximum of six months of 2.2%, but is still close to the 2%BOK target.

However, Kang’s warned rates cuts could accelerate the increase in national household debt and properties prices.