Bank of Korea Cuts Rates to Lowest Since August 2022 to Boost Sluggish Growth

South korea’s Central Bank Cut Rates By 25 Basis Points Tuesday to their lowest since August 2022, as it strives to stimulate a slowing economy.

The bank of korea cut rates to 2.75% from 3%, in line with expectations from economists polled by reates, trimming them for the third time in four meetings.

The decision come as south korea continues to grapple with political uncertainty over the impeachment trial of President Yoon Suk Yeol.

The Country’s Constitutional Court will Convene for the Final Hearing of Yoon’s Trial Tuesday, according to domestic media.

Immedited after the rate decision, The Country’s Benchmark Kospi Stock Index Fell 0.46%, while the South Korean Won Weakened 0.2% to Trade at 1,431.3 Against the us dollar.

Speaking to cnbc’s “Squawk Box Asia“Alex Holmes, Asia Research Director at the Economist Intelligence Unit, said he expects the box to cut rates faster rather than Slower.

The Bok Initial Had Concerns Over Financial Stability, Especially Over Reheating The Housing Market and household debtBut following the martial law flip-foot by yoon in December, consumer and business sentiment in south korea plunged, shifting the “balance of risks” toward the economy, holmes said.

“There’ll be concern now about supporting the economy and inflation, and these concerns about household debt

South korea’s gdp Growth in the fourth Quarter Missed Expectations, Clocking Its Slowest Expaniation in Six Quarters at 1.2%, according to Advance Estimates. The Bok attributed the Slowdown to Weakness in Consumption and Construction Sector.

The widening of the rate spread between the us dollar and south korean won has not seen a meaningful bond capital outflow, citi said in a not earlier this month, which sees a “Limited Negative IPACNESS in the South Korean Won on the Country’s Financial Industry and Foreign Capital Flows.

Min joo kang, Senior Economist for South Korea and Japan at Ing, Said in a Note Last Week That The Political Turmoil in Seoul that Trigered Excessive Weakness in the South Korean Won has said.

She also said that inflation would remain within the box 2% target range this year, which will give it more room to cut rates amid reciprocal tariff threats from the trump administration. South korea’s Inflation in January Climbed to a Six-month high of 2.2%, but is still close to the box’s target of 2%.

However, kang warned rate cuts could accelerate the risk in domestic household debt and Property Pries.