BOK holds key rate unchanged amid weak currency, Trump uncertainty

Welcome to Within The Frame, where we bring you today's most pressing issues from across the globe, I'm Kim Mok-yeon.

The arrest of South Korean President Yoon Suk Yeol this week has raised concerns about its impact on the economy.

Amid ongoing uncertainty, the Bank of Korea held its benchmark interest rate steady at 3 percent and downgraded its growth forecast for this year, now predicting growth to fall below 1.9 percent.

As experts assess the situation, key questions remain about how recent decisions by the central bank will shape the 2025 economic outlook.

And also, will government measures aimed at stabilizing prices and boosting consumption be enough to deliver the desired results?

For answers to these questions, we're joined by Song Soo-young, Professor of Business and Economics at Chung-Ang University.

Also joining us is Minjung Park, Professor of Business at Kumoh National Institute of Technology

(PARK) 1. Let's start with Professor Park, until now, President Yoon's potential arrest has been a significant variable in resolving uncertainties in the financial market.

With President Yoon's arrest on the 15th and the confrontation coming to an end, what impacts do you foresee on exchange rates, consumer sentiment, etc.? Do you think a positive trend will emerge?

(SONG) 2. Recently, the national research institute, the KDI, diagnosed that "economic downside risks are increasing amidst political uncertainty." They analyzed that economic sentiment is worse now compared to the impeachment crisis of 2016. What do you think is the reason for this?

(SONG) 3. In the first monetary policy direction meeting of the year on the 16th, the Monetary Policy Committee decided to freeze the base interest rate at 3%. What is the reason behind this decision?

(PARK) 4. Meanwhile, The real estate slump that started in the second half of last year seems to be worsening at the start of this year. How do you think a freeze of the base interest rate in this monetary policy meeting will affect the real estate market?

(SONG) 5. Since the second half of last year, the household loan interest rates at commercial banks have been steadily rising, but many expect them to decrease in the first quarter of this year. What will be the economic impacts, such as on the real estate market? Could household debt rise again?

(PARK) 6. Now to the U.S., there are expectations that the Federal Reserve may freeze interest rates at the upcoming FOMC meeting at the end of this month. What is your view on this? What impact do you think it will have on domestic economic factors like exchange rates?

(SONG) 7. With the decline in economic growth, there have been discussions about supplementary budgets, and the Bank of Korea has continuously mentioned the need for them. What are your thoughts on its necessity?

(PARK) 8. In preparation for the Lunar New Year, the government has prepared the largest-ever holiday measures, including the release of 265,000 tons of key goods and a 90 billion won discount support plan. Will these measures have their desired effect and stabilize prices?

(SONG) 9. The government has designated January 27th, the day before the Lunar New Year holiday, as a temporary public holiday. This was meant to promote domestic travel, but with the long holiday, demand for overseas travel is increasing. How effective do you think this measure will be in boosting domestic consumption, which was its original intent?