Anchor: The South Korean central bank says the economy may have logged negative growth in the first quarter. Even as the Bank of Korea warned that growth is unlikely to meet its earlier forecast, its rate-setting committee on Thursday decided to keep the key interest rate steady at two-point-75 percent amid a weak won.
Kim Bum-soo has more.
 
Report: The South Korean central bank has kept the key interest rate steady at two-point-75 percent to shore up the wobbly local currency amid the Trump administration’s on-again, off-again tariff initiative.

The Bank of Korea’s Monetary Policy Committee made the decision Thursday, saying it is necessary to remain cautious about the impact of the won’s fluctuations and the household debt level. 

Speaking to reporters after the rate decision, Bank of Korea Gov. Rhee Chang-yong said the central bank has chosen to slow down and wait to fully assess the situation. 

[Sound bite: Bank of Korea Gov. Rhee Chang-yong (Korean-English)]
“Among the six members of the Monetary Policy Committee, five believe a rate cut is necessary in consideration of growth and prices, but agreed to freeze the rate amid policy uncertainties and to stabilize the financial situation. I would liken the situation to entering a dark tunnel and waiting until things brighten up again. The Canadian central bank decided to freeze the rate for the same reason yesterday.”
 
Thursday’s rate freeze follows a quarter-percentage-point cut in February, which marked the third reduction since October of last year.

While pausing its monetary easing, the central bank made it all the more clear that the South Korean economy is struggling, saying the nation may have already logged negative growth in the first quarter.

[Sound bite: Bank of Korea Gov. Rhee Chang-yong (Korean-English)]
“Due to the U.S. government’s tariff policies, institutions at home and abroad are lowering their outlook [for the South Korean economy]. This applies not only to us but to countries around the world. In particular, given the lingering political uncertainties, which have gone on longer than expected, first quarter-growth is likely to be lowered considerably.”

The central bank had previously forecast a point-two percent expansion for the first three months of the year and one-point-five percent growth for all of 2025. 

Now the Bank of Korea believes the economy will lag behind its earlier predictions amid the intensifying global trade war. 

Some analysts believe the Bank of Korea may cut the benchmark lending rate by 25 basis points in May, after fully assessing the impact of the U.S. tariffs.
Kim Bum-soo, KBS World Radio News.