Bank of Korea board members open to near-term rate cut, see headwinds from US policies -minutes (updated)

Shinsung Tongsang Co

04/02/2025 07:39

(Adds a comment from BOK board member)
       SEOUL, Feb 4 (Reuters) - A voting board member, Shin
Sung-hwan, who dissented in the Bank of Korea's decision to keep
policy rates unchanged in January, said the economy faces bigger
risks due to domestic political turmoil and U.S. policy changes,
minutes from the bank's meeting showed on Tuesday.
    The Bank of Korea on Jan. 16 unexpectedly voted 6-1 to keep
its policy interest rate unchanged and signalled it needed to
wait for the domestic political turmoil weighing on the currency
to stabilise before it could make further rate cuts. 
        Only Shin voted to cut interest rates by 25 basis points
on Jan. 16, when the bank decided to keep its benchmark interest
rate  KROCRT=ECI  unchanged at 3.00%.
  
        Most, including Shin, said the bank should be open to
near-term policy easing in the face of increased political and
external uncertainties as South Korea continues to grapple with
the worst political turmoil in decades after impeached President
Yoon Suk Yeol's brief imposition of martial law. 
  
        They also cited uncertainties related to U.S. President
Donald Trump's trade policies, describing this as clouds hanging
over the trade-reliant nation.
  
        "It is desirable to cut the interest rate after
examining the effect of the last two interest rate cuts and
observing the policy direction of the new U.S. government, as
well as the U.S. Federal Reserve's interest rate decision, and
the political and economic situation at home and abroad," one of
the board members said.
  
        Only dissenters were identified in the minutes. 
  
        South Korea's 
    exports fell
     in January for the first time in 16 months and at the
sharpest pace in a year and a half due to U.S. tariff
uncertainty and an unfavourable calendar effect, preliminary
data released on Saturday showed. 
  

 (Reporting by Cynthia Kim
Editing by Ed Davies)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))