Bank of Korea Governor States Board Must Address Household Debt, Reports Reuters

SEOUL – The governor of South Korea’s central bank stated on Monday that discussions regarding the effects of recent government actions aimed at controlling household debt will be necessary before considering any interest rate cuts in the near future.

Rhee Chang-yong, responding to inquiries about expectations for a potential rate reduction next week, mentioned, "I have not yet been able to discuss with monetary policy board members the effects of government policies." He emphasized the importance of consulting with the board during the upcoming policy meeting and refrained from commenting on the potential for consecutive rate cuts in the following months.

These comments come as market anticipation grows that the central bank may decide to lower its policy rate from the current 3.50%, which is the highest level observed since late 2008, in an effort to bolster domestic demand.

Recently, one board member indicated that government initiatives to limit household debt are expected to gradually produce results, while another expressed the need for more data before concluding that rate cuts are warranted.

The Bank of Korea had previously opted to maintain interest rates at 3.50% in a unanimous decision, reflecting ongoing concerns regarding rising housing prices and increasing debt levels. The central bank’s next meeting is scheduled for October 11.