South Korea's central bank is widely expected to lower its benchmark interest rate this week in a bid to support the slowing economy, a poll showed Sunday.
In the recent survey by Yonhap News Agency, all seven economists polled said they expect the Bank of Korea to cut its policy rate by 25 basis points to 2.50 percent from the current 2.75 percent at its rate-setting meeting Thursday, aiming to boost consumer spending and corporate investment.
Such an outlook comes after government data showed the country's real gross domestic product contracted 0.2 percent from three months earlier in the first quarter.
Experts also expected the BOK to revise down its 2025 growth outlook from the current 1.6 percent to below 1 percent.
Several private-sector research institutions have already lowered their growth projections. The state-run Korea Development Institute recently halved its growth forecast to 0.8 percent from 1.6 percent.
The median 2025 growth forecast by eight major overseas investment banks also stood at 0.8 percent as of end-April.
Meanwhile, the recent appreciation of the Korean won against the US dollar may give the BOK additional room to ease policy, the experts said.
The dollar had surged to 1,487.6 won on April 9, following the implementation of reciprocal tariffs by the US government. However, the greenback weakened to 1,375.6 won Friday amid heightened uncertainty over US trade policy and concerns about the country's growing fiscal deficit.
At its latest rate-setting meeting, the BOK held the policy rate steady at 2.75 percent while citing the nearly 1,500 won-per-dollar exchange rate as a key risk factor.
Analysts said exchange rate pressures are unlikely to hinder a rate cut, as domestic political uncertainty continues to ease.
They said any monetary easing should be accompanied by fiscal measures, such as a supplementary budget, to support Asia's fourth-largest economy.
South Korea's unexpected first-quarter contraction has been partly attributed to the political instability that followed former President Yoon Suk Yeol's brief imposition of martial law Dec. 3. Yoon was removed from office April 4. (Yonhap)
