Latest news with #RheeChang-yong
Jordan News
10-07-2025
- Business
- Jordan News
Bank of Korea Holds Interest Rate Steady at 2.5%, As Expected - Jordan News
Bank of Korea Holds Interest Rate Steady at 2.5%, As Expected The Bank of Korea (BOK) kept its key interest rate unchanged on Thursday morning, aiming to ensure financial stability amid concerns over the rapid rise in housing prices and household debt. اضافة اعلان In a widely expected decision, the BOK's Monetary Policy Committee held the benchmark interest rate steady at 2.5% during its policy meeting in Seoul. This move follows a rate cut in May, when the central bank reduced the rate by 25 basis points to support economic growth in light of weak domestic demand and uncertainties triggered by broad U.S. tariff measures. Today's decision underscores the BOK's commitment to maintaining financial stability despite ongoing pressure to stimulate economic growth, according to the official Yonhap News Agency. Housing prices have surged in Seoul and parts of the greater capital area, driven by improved financial conditions and expectations of further price increases under the new liberal government. Household loans provided by South Korean banks rose by 6.2 trillion won ($4.51 billion) in June compared to the previous month, marking the largest monthly increase since August 2024. The BOK expects this upward trend to continue in the coming months. In response, the government imposed stricter mortgage regulations late last month, capping home loan amounts in the capital region at 600 million won, and suspending mortgages for individuals owning more than one property. Bank of Korea Governor Rhee Chang-yong previously noted that the pace of interest rate cuts would be adjusted depending on the housing market, despite the ongoing easing cycle that began in October 2024. Following May's rate cut, Rhee warned: "Cutting the key interest rate too quickly could lead to asset bubbles, particularly in real estate. We must avoid repeating the mistakes made during the COVID-19 pandemic." Analysts say holding the rate steady gives the central bank time to assess the impact of the government's supplementary budget. Last week, the National Assembly approved a 31.8 trillion won supplementary budget aimed at stimulating the economy and supporting citizens' livelihoods. This comes after a 13.8 trillion won economic stimulus package passed in May. The BOK also took into account the interest rate gap between South Korea and the United States, which currently stands at 2 percentage points. A wider gap could increase volatility in the foreign exchange market. U.S. Federal Reserve Chair Jerome Powell has taken a cautious stance on rate adjustments, citing the resilience of the U.S. economy and ongoing uncertainties. Source: Sky News
Korea Herald
10-07-2025
- Business
- Korea Herald
BOK halts easing cycle to counter soaring home prices
Central bank keeps rates steady, citing debt risks over growth concerns 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.
Business Times
09-07-2025
- Business
- Business Times
South Korea's household loan surge puts rate-cut plans under pressure
[SEOUL] South Korea's household lending surged in June at the fastest pace in 10 months, driven by a hot property market in Seoul that's complicating the central bank's efforts to support the economy with looser policy. The value of loans rose by US$4.5 billion in June from a month earlier in the biggest increase since August 2024, according to Bank of Korea (BOK) data on Wednesday (Jul 9). Housing loans posted the sharpest gains in nine months. Compared with a year ago, lending increased 4.1 per cent in June, marking the fourth consecutive month of year-on-year growth above 4 per cent. While the pace remained unchanged from the previous month, it remains a cause for concern as it continues to outpace inflation. Mortgage lending has continued to accelerate in recent months, fuelled by a rebound in housing transactions. Other household borrowing also rose, supported by steady demand for stock investment and living expenses, the central bank said in a statement. 'The increase in home transactions over the past few months appears to have been reflected with a time lag, leading to a continued expansion in loan growth since April,' Park Mincheol, senior manager of financial market affairs team, said at a media briefing. 'Given that housing transactions rose sharply again in May and June, we expect this upward trend to continue and further accelerate in July and August as the lagged effects play out.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up For the BOK, rising household debt adds to caution around cutting interest rates too quickly as it tries to support an economy grappling with the fallout from US trade tariffs. The central bank is expected to keep rates steady at its meeting on Thursday as policymakers weigh risks tied to household debt, an overheated real estate market, and potential spillovers from US trade actions. The government has stepped in with a new cap on the maximum amount of mortgage loans for home purchases in the greater Seoul area, but it remains unclear whether those efforts are enough to rein in household borrowing risks. In May, the central bank lowered its key interest rate by a quarter percentage point and downgraded its growth outlook for the year, citing the drag from US trade tariffs. BOK governor Rhee Chang-yong signalled that further rate cuts remain on the table, though the bank is proceeding cautiously given concerns about household debt and soaring property prices. BLOOMBERG
Business Times
09-07-2025
- Business
- Business Times
Korea's household loan surge puts rate-cut plans under pressure
[SEOUL] South Korea's household lending surged in June at the fastest pace in 10 months, driven by a hot property market in Seoul that's complicating the central bank's efforts to support the economy with looser policy. The value of loans rose by US$4.5 billion in June from a month earlier in the biggest increase since August 2024, according to Bank of Korea data on Wednesday (Jul 9). Housing loans posted the sharpest gains in nine months. Compared with a year ago, lending increased 4.1 per cent in June, marking the fourth consecutive month of year-on-year growth above 4 per cent. While the pace remained unchanged from the previous month, it remains a cause for concern as it continues to outpace inflation. Mortgage lending has continued to accelerate in recent months, fuelled by a rebound in housing transactions. Other household borrowing also rose, supported by steady demand for stock investment and living expenses, the central bank said in a statement. 'The increase in home transactions over the past few months appears to have been reflected with a time lag, leading to a continued expansion in loan growth since April,' Park Mincheol, senior manager of financial market affairs team, told reporters in a briefing on Wednesday. 'Given that housing transactions rose sharply again in May and June, we expect this upward trend to continue and further accelerate in July and August as the lagged effects play out.' For the BOK, rising household debt adds to caution around cutting interest rates too quickly as it tries to support an economy grappling with the fallout from US trade tariffs. The central bank is expected to keep rates steady at its meeting on Thursday as policymakers weigh risks tied to household debt, an overheated real estate market, and potential spillovers from US trade actions. The government has stepped in with a new cap on the maximum amount of mortgage loans for home purchases in the greater Seoul area, but it remains unclear whether those efforts are enough to rein in household borrowing risks. In May, the BOK lowered its key interest rate by a quarter percentage point and downgraded its growth outlook for the year, citing the drag from US trade tariffs. Governor Rhee Chang-yong signalled that further rate cuts remain on the table, though the bank is proceeding cautiously given concerns about household debt and soaring property prices. BLOOMBERG
Korea Herald
06-07-2025
- Business
- Korea Herald
BOK calls for oversight body to regulate stablecoins
With talks around won-denominated stablecoins heating up, the Bank of Korea has proposed setting up a policy body to regulate the issuance of the digital payment instrument. In a recent submission to the policy planning committee under President Lee Jae Myung, the central bank suggested that any issuance of won-backed stablecoins should require consensus among relevant institutions, including the BOK itself. While the BOK had remained wary over adopting a won-backed stablecoin, the committee has reportedly been pressuring the BOK to incorporate the digital asset. 'A pan-governmental regulatory response is necessary,' the BOK stated. 'A policy body consisting of relevant authorities should be considered.' The BOK cited the Stablecoin Certification and Review Committee under the US Genius Act as a precedent to support its stance. The bill, passed by the US Senate, stipulates that only deposit-taking institutions, or simply banking entities, approved by the Federal Reserve may issue stablecoins. To ensure a thorough vetting process, public companies that are not primarily engaged in financial services, or non-banking entities, should obtain unanimous approval from the committee to issue stablecoins. The proposal marks a turn from the BOK's previous stance on stablecoins. The central bank had touted its pilot project for a central bank digital currency as a state-led alternative to private stablecoins, repeatedly citing concerns against the payment instrument in terms of operating monetary policy and foreign exchange rules. But it recently backed down, putting the pilot test for tokenized deposit on a halt, citing 'regulatory uncertainty.' Though the two digital currencies are not mutually exclusive, the growing support for stablecoins could cast doubt on the CBDC's role in digital payment landscape. 'Given this new demand, we definitely have to recalibrate the plan,' BOK Gov. Rhee Chang-yong said in a media interview earlier this month, referring to the momentum building up for won-denominated stablecoins.
