The Bank of Korea (BOK) announced on February 25, 2025, that it has cut its benchmark interest rate to 1.25%, the lowest level since August 2022. The decision comes as the central bank seeks to stimulate economic growth amid slowing domestic demand and global economic uncertainty.

BOK Governor Lee Ju-yeol stated that the rate cut is necessary to support the economy and boost inflation, which has remained below the bank’s 2% target. “We are taking proactive measures to ensure economic stability and growth,” Lee said.

The rate cut has been welcomed by businesses and consumers but has raised concerns about rising household debt and potential asset bubbles. Analysts warn that further rate cuts could exacerbate these risks.

The South Korean won weakened slightly against the U.S. dollar following the announcement, while the stock market saw a modest rally.