The Monetary Policy Committee of the Bank of Korea decided on the 11th to lower

The Monetary Policy Committee of the Bank of Korea decided on the 11th to lower the base interest rate by 0.25 percentage points to 3.25%.

Bank of Korea Governor Rhee Chang-yong, regarding the decision to lower the interest rate, stated that "there is room for further rate cuts for the time being" and expressed a cautious approach, indicating that they would assess the economic situation carefully.

During a press briefing, Governor Rhee explained, "There is no need to maintain unnecessary tightening when inflation rates are stable," emphasizing that the current interest rate is above the upper limit of the neutral rate.

He added that the pace of future rate cuts would be determined while monitoring financial stability, noting that this rate cut could be interpreted as a hawkish rate reduction.

Regarding household loans, Governor Rhee mentioned that there had been "significant progress in the trends related to mortgage loans," citing the decrease in apartment transaction volumes in September and the slowdown in the rise of housing prices in the metropolitan area.

However, he emphasized, "We cannot definitively say that financial stability has been achieved, and we need to continue monitoring the ongoing policy situation."

The views of the Monetary Policy Committee members on the rate cut were also introduced.

Out of the six committee members, five expressed the opinion that the base rate should be maintained at 3.25%, while one argued that the possibility of further rate cuts should remain open.

Governor Rhee explained, "It will take time to assess the impact on financial stability, such as real estate prices and household debt, and many opinions were raised about monitoring factors such as the U.S. presidential election and geopolitical risks."

In the same announcement, the interest rate on the financial intermediary support loan for small and medium-sized enterprises (SMEs) was also lowered from 2.0% to 1.75%, strengthening support for vulnerable SMEs.

Governor Rhee emphasized that the Bank of Korea's rate cut was made at an appropriate time, saying, "In August, after the government's macroprudential policy was strengthened, it was deemed appropriate to lower the interest rate."

Regarding the controversy over whether this rate cut was delayed, Governor Rhee countered, stating, "Considering the increasing trend in household loans, it was made at the right time."

Meanwhile, Governor Rhee expressed pride in South Korea's inclusion in the World Government Bond Index (WGBI), evaluating that "the structure of the foreign exchange market has been transformed to improve access to the Korean won market, and the Bank of Korea contributed to this process."


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Bank of Korea cuts base rate by 0.25%... Governor Rhee Chang-yong says "Further rate cuts possible for the time being."