Presidential Office "Respects BOK Monetary Policy Committee's Rate Cut Decision... Will Help Domestic Demand Recovery" (Comprehensive)

Welcoming the Surprise Decision by Inha University

The Presidential Office stated on the 28th that the Bank of Korea's decision to lower the base interest rate by 0.25 percentage points "will help the recovery of domestic demand."

A senior official from the Presidential Office said on the same day, "We respect the Monetary Policy Committee's decision to cut the base interest rate," expressing this view.

The Bank of Korea surprised the market by lowering the base interest rate on this day. The Monetary Policy Committee of the Bank of Korea announced at the monetary policy direction meeting held at the Bank of Korea headquarters in Jung-gu, Seoul, that the base interest rate was set at 3.00% per annum. This is a 0.25 percentage point reduction from the previous 3.25%.

After lowering the base interest rate by 0.25 percentage points last month and pivoting (changing monetary policy) for the first time in 3 years and 2 months, the Bank of Korea has cut rates consecutively twice.

Despite the recent stabilization of the won-dollar exchange rate in the 1400 won range and its upward trend, the Bank of Korea's surprise rate cut decision is interpreted as a result of the worsening outlook for South Korea's economy and growth.

In particular, as difficulties for small business owners and self-employed individuals continue, the perceived economy has not improved, and domestic demand remains sluggish, raising the necessity for a rate cut even in Yongsan. Earlier in August, the Presidential Office unusually expressed regret over the Bank of Korea's decision to 'freeze' the base interest rate, sparking controversy over government intervention.

A Presidential Office official said, "Monetary policy decisions are the Bank of Korea's exclusive authority," adding, "This rate cut decision is welcome in a situation where domestic demand stimulation is necessary."

Lee Chang-yong, Governor of the Bank of Korea, is striking the gavel at the Monetary Policy Committee meeting held at the Bank of Korea in Jung-gu, Seoul on the 28th. Photo by Yonhap News