[Exclusive] Growth Rate Falls to 1.5% Due to 'Trump Tariffs'... 90% of Experts Say 'Interest Rates Will Drop'

Hankyung Economist Club experts predict that the Bank of Korea will lower its benchmark interest rate by 0.25 percentage points at the Monetary Policy Committee meeting on the 25th. They diagnose that rate cuts can no longer be delayed to respond to the economic downturn.

Interest Rate Cut Cannot Be Delayed

According to a survey conducted by the Korea Economic Daily among Hankyung Economist Club members on the 23rd, 17 out of 19 respondents (89.5%) predicted that the current benchmark interest rate of 3.0% per annum would be lowered by 0.25 percentage points at this month's monetary policy direction meeting.

The risk of growth rate decline was cited as the urgent reason for the rate cut. JP Morgan economist Park Seok-gil said, "As export growth rates decline and domestic demand recovery is delayed, Korea's growth rate this year will remain at 1.2%," adding, "Interest rates need to be lowered to respond to downward pressure on growth." Professor Seok Byung-hoon of Ewha Womans University's Economics Department pointed out that "the risk of export slump causing economic recession is increasing due to the Trump administration's pressure to raise tariffs."

The recent drop in the won-dollar exchange rate to the 1,430 won per dollar level also increases the possibility of an interest rate cut. Professor Shin Kwan-ho of Korea University's Economics Department cited "serious domestic demand contraction while the exchange rate has stabilized to some extent" as a reason for the need for a rate cut.

On the other hand, Professor Lee Yoon-soo of Sogang University's Economics Department viewed that maintaining current rates would be appropriate, saying "while the short-term stimulus effect of rate cuts is uncertain, it is difficult to ignore the negative effects that the Korea-US interest rate gap has on exchange rates and external financial stability."

"Export Hit by Trump's Tariff Bomb"

89.5% (17 members) of the Hankyung Economist Club members saw the need for a benchmark rate cut this month because they expect Korea's economic growth rate to remain at around 1.5% this year. Concerns were raised that exports, which had been the backbone of our economy, would be directly hit by the Trump administration's tariff policy while domestic demand remains sluggish due to political uncertainty.

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