BOK to begin cutting interest rates as early as July 2024

Korean Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok. [Photo by The Ministry of Economy and Finance]

South Korea’s central bank is expected to begin cutting interest rates as early as July 2024 after the United States signaled three interest rate cuts within the year and stocks soared around the world, including in Korea. But the Bank of Korea (BOK) is expected to freeze the rate at its upcoming monetary policy committee meeting scheduled for April 12th, 2024, as inflation concerns remain.

“The U.S. Federal Reserve’s decision to freeze the benchmark interest rate will contribute to maintaining stability in international financial markets,” Korean Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok said during an emergency meeting on macroeconomic and financial conditions in Seoul on Thursday following the U.S. decision to hold rates steady at the conclusion of its March 2024 meeting. “We will coordinate responses among related institutions as the possibility of increased volatility cannot be ruled out.”

The meeting was attended by BOK Governor Rhee Chang-yong, Financial Services Commission (FSC) Chairman Kim Joo-hyun, and Financial Supervisory Service (FSS) Governor Lee Bok-hyun.

The market expects that the BOK will initiate interest rate cuts from the second half of 2024.

“Once the U.S. begins cutting interest rate and the trend of interest rate cuts becomes evident, it is possible that the BOK will cut interest rates once in the fourth quarter of 2024,” LG Economic Research Institute researcher Cho Young-mu said.