South Korea’s Central Bank Governor Discusses Interest Rates

SEOUL (Reuters) – South Korea’s central bank governor Rhee Chang-yong stated on Monday that he would need to have discussions with board members regarding the impact of recent government measures aimed at controlling household debt. This statement came in response to inquiries about the potential for lowering interest rates in the upcoming week.

Rhee noted, “I have not yet been able to discuss with monetary policy board members the effects of government policies,” when asked if the central bank would consider a rate cut in October. He emphasized that it would be more appropriate to address this topic during the policy meeting and therefore refrained from giving any comments.

Currently, there are increasing market expectations that the Bank of Korea might reduce its policy rate from 3.50%, which is the highest level since late 2008. This move could be intended to stimulate domestic demand.

Last week, one board member mentioned that the measures implemented by the government to curb household debt were anticipated to take effect gradually. Another member indicated that more data was needed, but acknowledged that the arguments for rate cuts were becoming stronger.

In its previous meeting last month, the Bank of Korea opted to maintain the interest rates at 3.50%. This decision was unanimous, reflecting ongoing concerns among board members about escalations in housing prices and debt levels. The next rate-setting meeting is scheduled for October 11.