South Korea's central bank cuts borrowing costs to nurse the sluggish economy

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South Korea's central bank cuts borrowing costs to nurse the sluggish economy

2025-05-29 16:22 Last Updated At：16:30

SEOUL, South Korea (AP) — South Korea’s central bank cut its key interest rate and sharply lowered its growth outlook for the country’s economy in 2025, as it moved Thursday to counter U.S. President Donald Trump’s tariff hikes and weak domestic demand worsened by recent political turmoil.

Following a monetary policy meeting, the Bank of Korea cut its benchmark interest rate by a quarter percentage point to 2.5%. It was its fourth cut since October, when it began lowering borrowing costs for the first time in years to support a weakening economy. The bank slashed its 2025 growth outlook to 0.8%, nearly halving its previous projection of 1.5% announced in February.

Share prices jumped, with the Kospi gaining 1.7%.

Although trade tensions have recently eased, the global economy is still expected to slow due to the lingering effects of increased tariffs. U.S.-China friction over trade and geopolitical uncertainties will continue to weigh on markets, the bank said in a statement.

South Korea’s domestic economic activity remained sluggish in April following a contraction in the first quarter driven by weak consumption and business investment, the bank said. It said job creation in manufacturing and other sectors was slow.

Bank of Korea Governor Rhee Chang Yong said there could be additional rate cuts in coming months, citing the worsened outlook for the economy. But he also cautioned against lowering borrowing costs too quickly, given the country’s high household debt and real estate prices.

“If rates are lowered too quickly, there’s a high risk that liquidity will flow into asset prices like housing rather than boosting the real economy,” he said in a news conference. “Any base rate adjustment must take into account its impact on the real estate prices and household debt in the Seoul region," he said, referring to the country's capital area where house prices are highest.

Since beginning his second term, Trump has vowed to slap huge new tariffs on foreign products entering the United States, including those from Mexico, Canada and China, which he insists will create more domestic jobs and shrink the federal deficit.

In recent weeks, South Korea has sent trade officials to Washington to discuss the Trump administration’s trade measures, including reciprocal tariffs and potential product-specific duties on semiconductors and cars, which are major exports for the country’s trade-dependent economy.

A decision by a U.S. federal court saying Trump lacks the legal authority to impose such tariffs could upset his plans, but the White House has appealed and it's unclear what will happen in the longer run.

Experts say South Korea's leverage in trade talks and its ability to tackle domestic economic challenges have been undermined by political instability after former President Yoon Suk Yeol’s ill-fated imposition of martial law in December. Yoon was formally ousted from office in April, setting the stage for a snap presidential election next week.

Video captures Minneapolis immigration arrest in a city on edge after shooting of Renee Good

MINNEAPOLIS (AP) — Federal agents carrying out immigration arrests in Minnesota's Twin Cities region already shaken by the fatal shooting of a woman rammed the door of one home Sunday and pushed their way inside, part of what the Department of Homeland Security has called its largest enforcement operation ever.

In a dramatic scene similar to those playing out across Minneapolis, agents captured a man in the home just minutes after pepper spraying protesters outside who had confronted the heavily armed federal agents. Along the residential street, protesters honked car horns, banged on drums and blew whistles in attempts to disrupt the operation.

Video of the clash taken by The Associated Press showed some agents pushing back protesters while a distraught woman later emerged from the house with a document that federal agents presented to arrest the man. Signed by an immigration officer, the document — unlike a warrant signed by a judge — does not authorize forced entry into a private residence. A warrant signed by an immigration officer only authorizes arrest in a public area.

Immigrant advocacy groups have conducted extensive “know-your-rights” campaigns urging people not to open their doors unless agents have a court order signed by a judge.

But within minutes of ramming the door in a neighborhood filled with single-family homes, the handcuffed man was led away.

More than 2,000 immigration arrests have been made in Minnesota since the enforcement operation began at the beginning of December, said Homeland Security spokesperson Tricia McLaughlin.

Homeland Security Secretary Kristi Noem told Fox News on Sunday that the administration would send additional federal agents to Minnesota to protect immigration officers and continue enforcement.

The Twin Cities — the latest target in President Donald Trump’s immigration enforcement campaign — is bracing for what is next after 37-year-old Renee Good was shot and killed by an immigration officer on Wednesday.

“We’re seeing a lot of immigration enforcement across Minneapolis and across the state, federal agents just swarming around our neighborhoods,” said Jason Chavez, a Minneapolis city councilmember. “They’ve definitely been out here.”

Chavez, the son of Mexican immigrants who represents an area with a growing immigrant population, said he is closely monitoring information from chat groups about where residents are seeing agents operating.

People holding whistles positioned themselves in freezing temperatures on street corners Sunday in the neighborhood where Good was killed, watching for any signs of federal agents.

More than 20,000 people have taken part in a variety of trainings to become “observers” of enforcement activities in Minnesota since the 2024 election, said Luis Argueta, a spokesperson for Unidos MN, a local human rights organization .

“It’s a role that people choose to take on voluntarily, because they choose to look out for their neighbors,” Argueta said.

The protests have been largely peaceful, but residents remained anxious. On Monday, Minneapolis public schools will start offering remote learning for the next month in response to concerns that children might feel unsafe venturing out while tensions remain high.

Many schools closed last week after Good’s shooting and the upheaval that followed.

While the enforcement activity continues, two of the state’s leading Democrats said that the investigation into Good's shooting death should not be overseen solely by the federal government.

Minneapolis Mayor Jacob Frey and U.S. Sen. Tina Smith said in separate interviews Sunday that state authorities should be included in the investigation because the federal government has already made clear what it believes happened.

“How can we trust the federal government to do an objective, unbiased investigation, without prejudice, when at the beginning of that investigation they have already announced exactly what they saw — what they think happened," Smith said on ABC’s "This Week."

The Trump administration has defended the officer who shot Good in her car, saying he was protecting himself and fellow agents and that Good had “weaponized” her vehicle.

Todd Lyons, acting director of U.S. Immigration and Customs Enforcement, defended the officer on Fox News Channel’s “The Sunday Briefing.”

"That law enforcement officer had milliseconds, if not short time to make a decision to save his life and his other fellow agents,” he said.

Lyons also said the administration’s enforcement operations in Minnesota wouldn't be needed “if local jurisdictions worked with us to turn over these criminally illegal aliens once they are already considered a public safety threat by the locals.”

The killing of Good by an ICE officer and the shooting of two people by federal agents in Portland, Oregon, led to dozens of protests in cities across the country over the weekend, including New York, Los Angeles, Washington D.C. and Oakland, California.

Contributing were Associated Press journalists Giovanna Dell’Orto in Minneapolis; Thomas Strong in Washington; Bill Barrow in Atlanta; Christopher Weber in Los Angeles; and John Seewer in Toledo, Ohio.