Bank of Korea Gov. Rhee Chang-yong, center, bangs the gavel to open a Monetary Policy Committee meeting at the central bank in Seoul, Feb. 25. Yonhap

The Korean central bank on Thursday hinted at up to two additional interest rate cuts this year in an effort to spur economic growth.

The Bank of Korea (BOK) made the suggestion in its latest monetary policy report, noting the policy focus will be on how to ease downside pressure on economic growth amid stable prices.

Late last month, the BOK lowered its policy rate by a quarter-percentage point to 2.75 percent, which marked the third reduction in the current monetary easing cycle after the policy pivot in October.

"It is appropriate to put our monetary policy focus on alleviating downward pressure on the economy given the forecast for low economic growth for the time being," the BOK said.

"But the timing and the pace of further rate reductions will be decided after closely monitoring household debts, housing prices, the foreign currency exchange rate and other conditions related to financial stability," it added.

In its latest forecast announced last month, the BOK presented a 1.5 percent on-year expansion of the Korean economy for 2025, down 0.4 percentage point from its previous projection.

"The growth projection was based on the impact of our rate reductions made in October and November, as well as the expected effects of two to three additional cuts this year, including the one delivered in February," BOK official Choi Chang-ho told a press briefing.

The recent three rate cuts of a combined 0.75 percentage point are presumed to raise the country's GDP growth by 0.17 percentage point in 2025 and 0.26 percentage point next year, Choi noted.

"The self-employed and other vulnerable people have suffered greater economic difficulties," the BOK report said. "Responses by devising both monetary and fiscal policy measures are needed." (Yonhap)