The Bank of Korea (BOK) has cut its benchmark interest rate to 1.25%, the lowest level since August 2022, to stimulate the economy. The decision, announced on February 25, 2025, comes amid slowing domestic demand and global economic uncertainty.
BOK Governor Lee Ju-yeol emphasized the need for proactive measures to support the economy and achieve the bank’s 2% inflation target. “This rate cut is essential to ensure economic stability and growth,” Lee said.
While the move has been welcomed by businesses and consumers, it has raised concerns about rising household debt and potential asset bubbles. Analysts warn that further rate cuts could exacerbate these risks.
The South Korean won weakened slightly against the U.S. dollar following the announcement, while the stock market saw a modest rally.
