South Korea’s Central Bank Governor Sees Higher Uncertainty to Economic Growth
SEOUL (Reuters) – Bank of Korea Governor Rhee Chang-yong has warned that the pace of monetary policy easing will need to be flexible this year due to heightened political and economic uncertainty. In his New Year’s address, Rhee emphasized that conditions surrounding the economy will be more difficult than ever before.
Monetary policy must be operated with flexibility and agility, as political and economic uncertainty is unprecedentedly high, Rhee said. He announced that the pace of interest rate cuts will be flexible, as trade-offs on growth, inflation, foreign exchange, and household debt are expected to widen.
The Bank of Korea recently delivered its first back-to-back rate cut since 2009, citing concerns about trade risks from the incoming U.S. administration of President-elect Donald Trump. Rhee also warned that downside risks to the central bank’s economic growth forecast of 1.9% for this year have risen, citing uncertainty over U.S. trade policy and domestic politics. The won, which weakened more than 12% in 2024, may experience continued volatility for a considerable period of time, Rhee added.