[Econ & Biz] BOK holds interest rate steady at 2.75% in April amid "high uncertainty"

오늘 2분기 첫 금통위..환율 불안에 금리 2.75%로 동결

South Korea’s central bank has left its base rate unchanged following the latest policy board meeting — a decision that comes amid mounting economic uncertainty at home and abroad.
For more on this, we have our economic correspondent Moon Hye-ryeon in the studio.
Hye-ryeon, tell us more about the interest rate decision today.

That’s right. The Bank of Korea has held its benchmark interest rate steady at 2-point-7-5 percent as widely expected.
It announced the decision on Thursday following the third Monetary Policy Committee meeting of the year, taking a break after a quarter-point cut in February.

"Considering the overall uncertain conditions, we decided to maintain our policy stance toward rate cuts, but judged that it would be appropriate to keep the base rate at its current level this time and observe further how domestic and external policy conditions evolve.

The central bank emphasized that it would maintain the current rate while carefully monitoring changes in both domestic and global conditions.
Unstable exchange rates for the Korean won against the greenback amid trade and political uncertainties had fueled expectations of a rate freeze.
Earlier this month, the exchange rate between the won and the U.S. dollar peaked at its highest in 16 years, before plummeting to its lowest for the year.
Currently, the interest rate gap between the U.S. and South Korea stands at 1-point-7-5 percentage points.
A further widening of the gap could drive more capital outflows, placing additional downward pressure on the won.

So, how does the BOK diagnose South Korea’s economy at present?

The assessment is rather downbeat.
The bank acknowledged that economic growth slowed more than expected in the first quarter.
Political uncertainties and deteriorating trade conditions have hit both exports and domestic demand.
The BOK now expects South Korea’s growth rate this year to fall below its February projection of 1-point-5 percent — emphasizing the "highly uncertain" trajectory contingent on global trade negotiation outcomes.
In short, the economic outlook is not just dim, but also increasingly uncertain.
One of the most closely watched variables is inflation.
In March, the consumer price index rose 2-point-1 percent on-year, and core inflation — which excludes volatile food and energy prices — climbed 1-point-9 percent.
Both remain in line with earlier forecasts, suggesting inflation is relatively stable.
However, officials warn that a high exchange rate could still put upward pressure on prices.
Despite this, demand-side inflation pressures are weak, and falling global oil prices may help keep inflation close to the 2-percent mark.
That gives the BOK some breathing room to focus more on supporting growth.
In a broader context, we’re also seeing financial markets become more volatile.
Stock prices dipped over concerns about the global economy, and although there’s been a partial rebound, investors remain cautious.

What can we expect from future monetary policy decisions going ahead?

Towards the end of last year, it looked likely that this year would have two rate cuts.
But with this latest interest rate freeze, experts are saying that the most likely scenario is three or more cuts within the year.
The BOK has signaled that while it is open to further rate cuts, any moves will likely be gradual and data-driven.
One expert pointed out that the U.S. rate policy is one major factor for the BOK to take into account, so let’s take a listen.

“Tariffs are a major issue, but they are not the only one. One key factor is the U.S. Federal Reserve. Fed Chair Jerome Powell has made it clear that the Fed is in no rush to cut rates. If the Fed keeps rates high, that means the BOK has less room to maneuver without triggering capital outflows.”

But some analysts say the BOK is now shifting its focus.
Instead of placing all the weight on currency stability, it may be worth looking more closely at the domestic economy.

“Korea’s exchange rate against the dollar is also affected by the dollar index, the Japanese yen, and the Chinese yuan. So, rather than making decisions based solely on the exchange rate, the outlook is that the Bank of Korea will start focusing more on the domestic economy.”

Indeed, the Bank of Korea said it would continue to monitor changes in both domestic and global conditions, signaling that further rate cuts remain on the table — but with a cautious approach.

Thank you for your report.

Thank you for having me.

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2025-04-17, 20:00 (KST)