The Bank of Korea shifted its monetary policy stance from tightening to easing by cutting the base interest rate for the first time in 3 years and 2 months.
The Monetary Policy Committee of the Bank of Korea announced today that it has lowered the base interest rate from the previous 3.5% to 3.25%, a reduction of 0.25 percentage points.
The committee determined that it is appropriate to slightly reduce the degree of monetary policy tightening as the inflation rate shows clear stability and the pace of household debt growth is beginning to slow down, and they will monitor the impact going forward.
However, they emphasized the need to be cautious of the risks related to the impact of the interest rate cut on household debt.
Governor Lee Ju-yeol stated that the situation where attention needs to be paid to the increasing trend of household debt is ongoing, and in the future, the rate cut speed will be determined carefully and in a balanced manner by closely examining the trade-offs between policy variables such as inflation, growth, and financial stability.
The Monetary Policy Committee of the Bank of Korea had maintained a tightening monetary policy stance by raising the base interest rate by 0.25 percentage points in August 2021.
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