Korea: Central Bank leaves rates unchanged in April
Latest bank decision: At its meeting on 17 April, the Central Bank decided to leave the base rate unchanged at 2.75%.
Elevated uncertainty drives hold: The Bank judged that maintaining the current rate was appropriate given the high uncertainty in the economic outlook, driven by shifts in U.S. tariff policies and potential domestic fiscal stimulus after the June presidential election. The Bank’s hold was also influenced by volatile exchange rates and the desire to monitor the trend in household loans; high loan-taking had previously been flagged as a concern.
Monetary easing on the cards: The Central Bank stated that it was likely to cut rates going forward, but didn’t say when or by how much. Our panelists see between 25 and 75 basis points of cuts between now and end-2025.
Panelist insight: On the outlook, Goldman Sachs analysts said:
“We continue to expect a 25bp cut in May and another 25bp cut in August for now, with risks to our views skewed to faster and more easing given residual risk of further tariff surprises. We think that the policy mix of fiscal and monetary policy for the remainder of 2025 will hinge on tariff negotiations with the US and the scope and timing of fiscal stimulus.”