Korea’s central bank holds rate at 2.5% amid stability concerns

Published 10/07/2025, 12:32
Korea’s central bank holds rate at 2.5% amid stability concerns

Investing.com -- The Bank of Korea (BoK) maintained its policy rate at 2.5% on Wednesday, following a 25 basis point cut in May, as concerns about financial stability influenced the decision.

The central bank acknowledged that the fiscal stimulus package announced earlier would help boost growth starting in the third quarter. This comes as economic growth continues to trend below potential, with weakness in domestic demand and uncertainty from new reciprocal tariffs weighing on the economy.

According to Bank of America, "Considering all factors, we still see two cuts in 2H25 as the most-likely scenario."

Analysts suggest that growth stabilization could be achieved if the government’s proactive fiscal policy works alongside continued monetary easing in the near term.

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