Bank of Korea Cuts Rates, Slashes 2025 Growth Outlook

By Kwanwoo Jun

South Korea's central bank slashed its growth outlook for the year, cutting its policy rate in a widely expected move to support the country's sagging economy.

Ending a pause in its easing cycle, the Bank of Korea lowered its benchmark seven-day repurchase rate by a quarter percentage point to 2.50% on Thursday.

All 12 economists surveyed by The Wall Street Journal ahead of the decision had forecast that the bank would resume policy easing after taking a breather to assess the impact of higher U.S. tariffs and previous rate cuts on the economy. That followed cuts in February this year, and in October and November of 2024.

Thursday's decision was accompanied by a downgrade to the central bank's gross domestic product growth forecast for South Korea. It now expects the economy to expand 0.8% this year, down from its February projection of 1.5%. That would compare with estimated growth of 2.0% growth last year.

The country's headline inflation is likely to average 1.9% this year, unchanged from an earlier estimate, the central bank said.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com