The Bank of Korea's monetary policy board on Thursday decided to cut the nation's benchmark interest rate by 25 basis points, from 2.75 percent to 2.50 percent after six months of holding steady.
The decision was something of a surprise, although inflation has now dipped low enough to allow the bank some maneuvering room to counter soft economic data.
Consumer prices in South Korea were up 1.2 percent on year in April, easing from 1.3 percent in March and 1.4 percent in February.
Inflation remained beneath the central bank's target range of 1.5 to 3.5 percent, which it had lowered this year from 2 to 4 percent in 2012.
The central bank also expects CPI to remain low for the time being, and the board members believe that downside risks remain for the global economy.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.