South Korea's Economic Situation Demanding Rate Cuts

Prices are stabilising, creating an environment for rate cuts in South Korea, according to a senior presidential official on Sunday. "(South Korea) is one of the countries with the most stable price levels when compared to other countries globally," Sung Tae-yoon, policy chief for South Korean President Yoon Suk Yeol, told public broadcaster KBS.

"Therefore, I believe an environment where rates can be lowered is being created," Sung stated.

South Korea's consumer inflation fell for the second consecutive month in May to a 10-month low, according to official data released on Tuesday, falling short of market expectations.

The consumer price index (CPI) in May was 2.7% higher than a year ago, slower than the 2.9% increase in April and the 2.8% gain predicted by a Reuters survey of economists. It marked the slowest annual increase since July.

"As exports continue to improve and prices, the criteria for monetary policy, stabilise, monetary policy will also be able to be dealt with flexibly," Sung said on television.

South Korea's exports increased for the eighth consecutive month in May, boosted by strong chip sales, though overall shipment growth lagged market expectations, trade data showed earlier.