
BOK halts easing cycle to counter soaring home prices
The Bank of Korea held its base rate steady Thursday, aiming to rein in mounting household debt amid a resurgent property market.
The central bank maintained the rate at 2.5 percent. The rate freeze was supported by all six members of the Monetary Policy Board excluding BOK Gov. Rhee Chang-yong, whose individual vote is not disclosed.
Amid the financial authorities' move to impose strict lending regulations, such as capping mortgage loans at 600 million won ($437,000) in the Greater Seoul area, the BOK has also signaled its intent to curb the debt surge by keeping the base rate unchanged.
"Housing prices, especially in the Seoul metropolitan area, are rising faster than they did in August last year," BOK Gov. Rhee Chang-yong said at a press conference held shortly after the rate-setting meeting.
'The policy priority lies in stabilizing the market expectation and managing household loans to prevent a rise in housing prices,' Rhee said.
A sharp increase in household loans could pose a threat to the country's financial stability by heightening the risk of nonperforming loans, while also dampening overall consumption.
'The mounting household debts entail many side effects. The amount of the loan has already neared a tipping point that poses constraints on consumption and overall growth,' Rhee said.
Driven by increased housing transactions and soaring home prices, outstanding household loans at banks stood at 1,161.5 trillion won at the end of June — the largest monthly gain in 10 months — according to central bank data released on the previous day.
"The BOK has long held the view that the scale of a rate cut should be carefully managed so as not to fuel further increases in property prices," Rhee said.
The rate hold puts the brake on BOK's recent rate-cut cycle. Since October, the bank has been alternating between rate cuts and holds, bringing down the policy rate by a cumulative 1 percentage point to support the sluggish economy.
The widening Korea-US interest rate gap, now at a record 2 percentage points, is another key factor in the central bank's cautious stance. With the US Federal Reserve expected to hold its rate this month, an additional rate cut by the BOK would have widened the differential to 2.25 percentage points, raising concerns over foreign exchange market volatility.
"It is not that the Korea-US rate gap should not exceed a certain level mechanically," Rhee said, underlining that the central bank does not adhere rigidly to a specific threshold in setting its policy.
"While the dollar is expected to remain on a weakening trend, we will need to closely monitor the situation, though Korea's dependence on US monetary policy has lessened compared to the past."
Though the BOK kept the rate steady Thursday, market analysts viewed the central bank remains on track for a rate cut cycle.
'The Korea-US rate gap is concerning, but solely waiting for a rate reduction from the US is not viable. The external policy burden is expected to ease significantly once the tariff negotiations scheduled for Aug. 1 are confirmed,' said Yoon Yeo-sam, an analyst at Meritz Securities.
'While the rate cut could be delayed until October as the BOK assesses the impact of the real estate policies, the possibility of a rate cut in August remains high, provided the low-growth trend does not change significantly,' Ahn Ye-ha, an analyst at Kiwoom Securities, viewed.

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Korea Herald
a day ago
- Korea Herald
Opposition urges Lee to engage with Trump over canceled US tariff talks
South Korea's main opposition People Power Party on Friday lashed out at President Lee Jae Myung over Washington's abrupt postponement of a high-level tariff negotiation, calling for immediate diplomatic engagement with US President Donald Trump. Rep. Song Eon-seog, interim leader of the conservative People Power Party, said during a radio interview with local broadcaster SBS that Lee must fly to the US immediately and meet with Trump. "Japanese Prime Minister Shigeru Ishiba met directly with Trump, but Korea couldn't even secure a summit or a meeting with US negotiators," Song said. "Our deputy prime minister was informed at the airport that the talks were off." This came as the so-called "2+2" meeting between the two countries' finance and trade chiefs, originally set for Friday in Washington, was called off just a day prior. According to Seoul officials, the US informed Korea of the postponement via email at around 9 a.m. Thursday, citing a scheduling conflict involving US Treasury Secretary Scott Bessent. The talks were seen as a last-ditch opportunity to reach a breakthrough for concluding the ongoing US-Korea tariff deal before the Aug. 1 deadline — a date reportedly set by Trump himself. The sudden cancellation has fueled concern that no meaningful dialogue may take place before then. Song criticized the liberal administration's lack of preparation. 'They once pressured the previous administration to delay negotiations by impeaching key ministers and insisted the matter be passed on to the next government,' he said. 'But now that they've taken power, it's clear they weren't prepared at all — and it raises doubts as to whether Lee was ever truly ready for the job.' People Power Party spokesperson Choi Soo-jin called the situation a "diplomatic failure." "Korea alone has been excluded from the conversation," she said, pointing out that Japan, the Philippines and the European Union have all made headway in their own tariff talks with the US. "The US isn't doubting Korea — it's doubting the president. There are growing concerns that President Lee's repeated pro-China gestures are eroding trust in the alliance." Rep. Jang Dong-hyeok, a lawmaker who recently declared his bid for the party's leadership election in August, wrote on Facebook that the talks were "not postponed, but effectively rejected," adding that it remains uncertain whether a new meeting can be scheduled before the Aug. 1 deadline. The ruling Democratic Party of Korea pushed back against the criticism, accusing the opposition of using the talks for political gain. "It's shameless to use this crucial negotiation as a tool for partisan attacks," said Rep. Park Sang-hyuk, the party's deputy floor spokesperson. "Instead of undermining the government, the opposition should help by voicing strong demands to the US — such as refusing to further open the rice market or increase defense cost-sharing — to support our negotiation efforts." Park warned that the opposition's political attacks only weaken Korea's negotiating position. 'They're hurting our leverage,' he said. 'It's frustrating to see the opposition show such a fundamental lack of understanding.' Park also said that the government is exploring various channels, describing the cancellation as part of Trump's negotiation tactics. 'President Trump is known for frequently shifting his negotiation tactics, and there are likely to be many variables at play — but the government is continuing its efforts through multiple channels,' he said.
![[Editorial] Securing a fair deal](/_next/image?url=https%3A%2F%2Fall-logos-bucket.s3.amazonaws.com%2Fkoreaherald.com.png&w=48&q=75)
Korea Herald
2 days ago
- Korea Herald
[Editorial] Securing a fair deal
Korea must secure tariff terms no worse than Tokyo's as investment and export stakes grow As Japan and the United States conclude a high-profile tariff agreement, attention has quickly turned to South Korea. Tokyo's willingness to open its agricultural market, commit to joint energy projects and pledge a record-breaking $550 billion in US-bound investment has earned it a reduction in reciprocal tariffs from 25 percent to 15 percent — a benchmark now hardening into a minimum standard for Washington's other major trading partners. South Korea finds itself in a more compressed timeframe. The bilateral 2+2 ministerial trade talks scheduled for July 25 in Washington were postponed because US Treasury Secretary Scott Bessent had an urgent scheduling conflict. Seoul's Finance Minister Koo Yun-cheol was informed just before departure, though Korean industry and trade officials already in Washington are continuing working-level consultations. Seoul has emphasized that the postponement does not reflect any change in negotiating intent. But with the reciprocal tariffs slated to resume on Aug. 1, time is growing short. The Japan-US deal has raised the stakes. In addition to securing a 10-point tariff cut, Japan agreed to increase US rice imports by 75 percent, purchase 100 Boeing aircraft and participate in the Alaskan liquefied natural gas project. The US government claims the agreement will generate hundreds of thousands of domestic jobs and boost strategic industries. For South Korea, where more than 60 percent of 2024's $66 billion trade surplus with the US came from automobiles, a failure to match Tokyo's deal could erode competitiveness in a key export sector. Automakers like Hyundai and Kia, which compete directly with Japanese peers in the US market, would be particularly exposed. In anticipation of this, Seoul has assembled a proposed investment package exceeding $100 billion, drawing on commitments from major conglomerates such as Samsung, SK, Hyundai and LG. The plan, modeled loosely on Japan's, may expand further as talks progress. Additional participation in LNG development, including through public financial institutions, is also under review. However, Tokyo's massive pledge — roughly double Korea's in proportionate terms — and its acceptance of politically sensitive concessions raise the bar significantly. Washington's pressure tactics remain blunt. US President Donald Trump has warned that only countries that open their markets will be rewarded with lower tariffs, threatening 'much higher' duties otherwise. His administration has also criticized South Korea's non-tariff barriers, from digital platform regulations to agricultural restrictions. While Seoul has ruled out rice and beef as bargaining chips, citing food security, the government is reportedly exploring other forms of market access, including in digital trade and manufacturing partnerships. In parallel, Seoul must navigate additional entanglements. US demands around defense cost sharing, semiconductor collaboration and regulation of Korean digital platforms all intersect with the trade agenda. Meanwhile, reports indicate the European Union may also be nearing a 15 percent tariff agreement with Washington — a sign that may further isolate South Korea unless it can close a deal soon. Tokyo's agreement is not without trade-offs. Much remains unclear about the terms and timelines of Japan's commitments. But the symbolism of its 15 percent tariff outcome is already shaping expectations. For South Korea, the goal must be to avoid terms materially worse than those given to Japan or the EU. Any outcome perceived as inferior would carry real consequences, both economically and diplomatically. Protecting high-employment, high-surplus sectors such as automobiles and steel must be a central priority. To that end, South Korea's negotiators must aim for a calibrated strategy: offering proportionate concessions, targeting returns in industrial cooperation and investment, and securing transition support for exposed sectors. As deadlines near and peer deals take shape, the challenge is no longer just to reach an agreement, but to secure terms that protect South Korea's standing in its most critical export market.

Korea Herald
2 days ago
- Korea Herald
Global entertainment and media industry revenues to hit US$3.5 trillion by 2029, driven by advertising, live events, and video games: PwC Global Entertainment & Media Outlook
LONDON, July 24, 2025 /PRNewswire/ -- The global entertainment & media (E&M) industry edged towards US$3 trillion in revenue in 2024 and is forecast to hit $3.5 trillion in 2029 as advertising spend surges across platforms, according to PwC's Global Entertainment & Media Outlook 2025-29, released today. The E&M industry is projected to grow at a compound annual growth rate (CAGR) of 3.7% until 2029 – a rate above the projected global economic growth average, but below pre-pandemic highs. Economic uncertainty and anaemic consumer spending growth, amid heightened domestic and international competition in the industry, is expected to weigh on E&M growth rates through the forecast period until 2029. Bart Spiegel, Global Entertainment and Media Leader, PwC US, said: "As the E&M industry continues to be impacted by broader economic uncertainty and constrained consumer spending, advertising is emerging as the leading powerhouse of the global entertainment and media industry's revenues – a transformation expected to continue as AI transforms delivery models, democratises content production, serves highly curated content experiences, and reduces barriers to entry. The E&M industry has always been at the forefront of technological innovation, but companies will need to remain nimble and proactive to embrace the future and satisfy consumers in an ecosystem that rewards creativity and tailored content." Advertising to serve as industry engine for revenue growth as AI transforms advertising models As growth for paid or subscription products slows amid heightened industry competition and constrained consumer spending – particularly in mature markets – advertising is forecast to represent a significant driver of revenue growth for the E&M industry at-large. Of the three major E&M categories analysed (connectivity, advertising, consumer), advertising is expected to grow fastest – three times as fast (6.1% CAGR) as the consumer category (2%). The fastest growing E&M revenue metrics over the next five years are all advertising driven – including retail advertising (15%), social and mobile on-stream video advertising (15%), and connected TV in-stream internet advertising (14%). Digital formats, which account for 72% of overall ad revenue in 2024, will rise to 80% in 2029, with new technologies including AI and hyper-personalisation expected to drive this even further. High growth areas include retail search advertising in e-shopping (rising from 32.7% in 2020 to 45.5% in 2029) and advertising in video games (rising from 32.8% in 2024 to 38.5% in 2029). AI is impacting the E&M industry in many ways. One of the areas in which it is likely to influence revenue growth is in connected TV (any television that connects to the internet to stream video content). In 2020, connected TV advertising revenue equated to just 5.9% of total traditional broadcast TV advertising. In 2024, this figure had jumped to 22%. But with the rise of digital engagement and the prospect of AI-assisted hyper-personalisation, which may lead to greater end-user uptake, connected TV ad revenues will rise to $51 billion in 2029 – equal to 45% of traditional broadcast TV advertising. For now, connectivity remains the largest category, with spending reaching $1.3 trillion in 2029, growing at CAGR of 2.8% and driven mainly by mobile internet service revenue. However, advertising's pronounced growth rates are set to see the gulf between connectivity and advertising spend rapidly narrow by 2029. Non-digital revenue – including live music, events and cinema box office – lead consumer spending Consumers may spend more of their free time online, but they continue to spend more of their entertainment budget offline. In 2024, non-digital formats accounted for 61% of consumer revenue – a level of spend expected to broadly continue through the forecast period. While global cinema box office spending is expected to rise from $33 billion in 2024 to $41.5 billion in 2029, consumers' preferences are continuing to shift toward locally produced films. Globally, the top five US studios' market share has dropped from over 60% before the pandemic to 51% in 2024. Video gaming remains an industry bright spot The global video gaming industry continues to be an engine of E&M growth, with the global video games market exceeding the movie and music industry combined. Total revenues were $224 billion in 2024, with the industry expected to grow to nearly $300 billion in 2029 at a CAGR of 5.7%. Developing markets continue to lead E&M industry growth rates Excluding connectivity revenues (e.g., mobile service subscriptions), the US comfortably leads as the world's largest E&M market by revenue. It is forecast to grow at a CAGR of 3.8% until 2029 – lagging below the global average of 4.2%. Looking elsewhere, E&M revenues in China – the second largest market – will rise at a CAGR of 6.1%, powered primarily by its internet advertising segment, with a CAGR or 8.9%. The fastest growing markets globally continue to be in developing markets, including India and Indonesia, all with CAGRs above 7.5%. In India, much of the growth will stem from internet advertising – which is growing at a CAGR of 15.9% – driven by expanding internet penetration, rising 5G connectivity, and the popularity of social media and short-form video content. Wilson Chow, Global Technology, Media and Telecommunications (TMT) Leader, PwC China, said: "Consumers have never had as numerous or diverse choices of entertainment services on offer, but this competition, paired with economic uncertainty and rising costs, is seeing consumer spend growth stagnate. If entertainment and media businesses are to capture new audiences and generate growth, they must be thinking about the connected ecosystems in which they operate, leveraging the power of advertising and AI, the combination of which is allowing for far more cost-effective and personalised content creation and engagement models." Notes to Editors About the PwC Global Entertainment and Media Outlook 2025-2029 The PwC Global Entertainment and Media Outlook is an annual report covering the industry. A total of 54 countries and territories, spread across North America, Western Europe, Central Europe, Middle East & Africa, Latin America and Asia Pacific, are represented within the Outlook. The 'Rest of MENA' grouping is treated as a territory and comprises Algeria, Bahrain, Jordan, Kuwait, Lebanon, Morocco, Oman and Qatar. This year, it expands its coverage with the inclusion of Mauritius and Oceania as a reported region. These 54 territories account for around 74% of the global population, and the sum of all territories generates the 'total' estimate. The forecasting process begins with the collection of accurate and comprehensive historical data from publicly available sources such as trade associations and government agencies, which are cited when used directly. To supplement this, proprietary insights are gathered through interviews with industry associations, regulators, and leading market players. This combination of public and private data ensures a robust foundation for building forecasts. About PwC