09:01 AM EDT, 05/22/2025 (MT Newswires) -- Societe Generale sai it expects the Bank of Korea (BoK) to cut the policy rate from 2.75% to 2.50% at next Thursday's policy meeting and revise down its gross domestic product forecasts.

At the April meeting, policymakers strongly suggested that there would be a rate cut and that the near-term growth forecasts could be revised downwards. Since then, SocGen hasn't seen anything in the data that would be likely to deter them.

Indeed, the Q1 GDP contraction, continued uncertainty on United States tariffs and the decline in the USDKRW exchange rate further support monetary easing, pointed out the bank. As a consequence, SocGen foresees a unanimous decision to cut policy rates by 25bps and project the number of board members expecting a rate cut within three months to decline from six to four.

The bank also predicts the 2025 GDP forecast to be revised down from 1.5% to 0.8%.

SocGen maintains its base-case scenario of a terminal policy rate of 2.0% by year-end. According to the minutes to the April policy meeting, the BoK staff economist said that the effective lower bound of South Korea's policy rate would be higher than the pre-pandemic level given the tighter policy stance of global central banks and more serious concerns on domestic household debt.