South Korea unexpectedly cuts interest rates by 25 basis points – the first consecutive rate cuts since 2009

A pedestrian walks past the Bank of Korea sign on Monday, November 22, 2021, in Seoul, South Korea.

Sung-jun Cho | Bloomberg | Getty Images

South Korea unexpectedly cut its benchmark interest rate by 25 basis points to 3% on Thursday as it tries to boost its slow-growing economy.

Economists polled by Reuters expected the bank to keep rates at 3.25%.

This also marks the first time since 2009 that the Bank of Korea has cut interest rates twice in a row.

The Kospi stock index rose 0.18%, while the Kospi fell 0.37% against the dollar to 1,393.82 points.

The rate cut came after third-quarter GDP data was weaker than expected. South Korea’s third-quarter GDP grew at an annual rate of 1.5%, lower than the 2% expected by economists polled by Reuters.

Reuters reported that the Bank of Korea lowered its 2024 GDP forecast to 2.2% from 2.4% in August. The full-year growth forecast for 2025 was lowered from 2.1% to 1.9%.

Inflation in the country has also slowed sharply, with inflation in October at 1.3%, the lowest level since February 2021.

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