SEOUL: South Korea's Monetary Policy Board Members Call for Swift Economic Response

In a recent meeting on November 28, members of South Korea's monetary policy board emphasized the need for rapid and preemptive actions to address the slowing economy, according to minutes released on December 17.

The Urgency of Preemptive Measures
One board member highlighted the pressing need for proactive measures, stating, "It is deemed more urgent at this time to respond preemptively to downward pressure on the economy."

Coordination with Fiscal Policy
The member also stressed the importance of policy coordination, noting, "As rate cuts alone will be insufficient to control the risks at hand, there is a critical need for timely and flexible policy coordination with fiscal policy."

Heightened Uncertainties
Another member added, "Given heightened domestic and global uncertainties, monetary policy should closely examine the nature and impact of economic shocks and respond to them promptly and flexibly."

Back-to-Back Rate Cuts
In the November meeting, the Bank of Korea's board members voted 5-2 to lower interest rates by 25 basis points to 3.00%, marking the first consecutive rate cut since 2009, despite market expectations for a hold.

Dissenting Opinions
Some dissenting members argued that it would be more prudent to first assess the domestic implications of Donald Trump's win in the US presidential election and the reaction in the foreign exchange market before making a move.

Economic Growth Projections
South Korea's economic growth is projected to slow to 1.9% in 2025 and 1.8% in 2026, down from 2.2% in 2024, according to the central bank's latest forecasts.