The Bank of Korea released a strong signal of interest rate cuts on Thursday (April 17), pointing out that Trump's tariff policies pose a "significant risk". Under the shadow of the global trade war, the South Korean economy is facing its most severe challenge in a decade, with financial market volatility intensifying.

The arrow of interest rate cut is on the string, and the central bank rarely loosens its stance

Although the Bank of Korea kept its benchmark interest rate unchanged at 2.75% on Thursday, Governor Lee Chang yong made a bold statement at a press conference: "Except for me, all six policy committee members are open to a rate cut in May." This rare wording immediately caused market shock, and analyst Baek Yoon min of Jiaobao Securities bluntly stated, "A rate cut in May is a foregone conclusion, and the year-end interest rate may fall to 2.25%

Triple Strike: Wildfire, Coup, Trade War

The central bank warns that the economy may shrink in the first quarter, with record wildfires and political turmoil causing heavy damage, but the real 'nuclear bomb' comes from Trump's tariffs. Lee Chang yong candidly stated, "The intensity of US tariffs and the reactions of various countries are constantly changing, making it difficult for us to even set a basic economic scenario." Data shows that the Bank of Korea has cut interest rates three times in a row since October last year, and now it may begin its fourth round of easing.

Emergency rescue of 12 trillion yuan, with severe fluctuations in the Korean won

After the announcement, the decline of the Korean won against the US dollar narrowed to 0.16%, close at around 1416.1. The government is fighting on multiple fronts: on the one hand, negotiating with the United States to extend tariffs, and on the other hand, urgently drafting an additional budget of 12 trillion Korean won (8.4 billion US dollars). Minister of Planning and Finance Cui Xiangmu warned, "The economic downturn risks brought by tariffs far exceed expectations

Economic gamble before the presidential election

Before the presidential election on June 3rd, this economic defense battle was full of political implications. The shadow of former President Yoon Suk yeol's impeachment due to martial law has not dissipated, and the current government is trying to stabilize the situation through a combination of interest rate cuts and fiscal stimulus. But analysts warn that if the annual economic growth rate falls below 1%, South Korea may be forced to take more aggressive measures.

Conclusion:

When Trump's tariff stick encounters the "internal and external troubles" of the South Korean economy, this crisis is not only about adjusting monetary policy, but also about reshaping the entire economic landscape of Northeast Asia. As the tariff deadline approaches, the South Korean economy is entering a critical testing period.