SEOUL (Reuters) – South Korea’s central bank governor said on Thursday the pace of monetary policy easing would need to be flexible this year due to heightened political and economic uncertainty.
“This year, conditions surrounding our economy will be more difficult than ever before,” Bank of Korea Governor Rhee Chang-yong said in a New Year’s address.
“Monetary policy needs to be operated with flexibility and agility, as political and economic uncertainty is unprecedentedly high,” Rhee said.
The pace of interest rate cuts ahead will be flexible, as trade-offs on growth, inflation, foreign exchange and household debt are expected to widen, Rhee added.
At its final policy meeting of 2024, the BOK delivered the first back-to-back rate cut since 2009, as policymakers turned wary on trade risks from the incoming U.S. administration of President-elect Donald Trump.
Rhee said 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.
On the won, which weakened more than 12% in 2024 to record the worst year since 2008, Rhee said volatility could persist for a considerable period of time.
