South Korea has had one foot on the brake but simultaneously the other on the accelerator. Over the past month, policymakers have stepped up efforts to support a cooling economy but are still trying to maintain sight of the bigger picture. Rate cuts, market interventions, pension reforms – these are all part of a broader effort to manage near-term risks while shoring up long-term resilience. However, the road ahead isn’t straight. Domestic demand remains sluggish, external pressures are growing, and debt risks are quietly building.
Monetary Policy.The Bank of Korea finally pulled the trigger in April, cutting the base rate by 25bps to 2.75%. It also downgraded its 2025 growth forecast to 1.5% (from 1.9%), citing weak consumption and growing uncertainty over US trade tariffs. On paper, it’s a stimulus move but in reality it is telling us just how concerned the BOK is about the recovery stalling out. The messaging has been cautious – no big promises. Instead, there have just been signals...
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