SME Sector "Welcomes Base Rate Cut... Should Lead to Commercial Banks Lowering Interest Rates"

The small and medium-sized enterprise (SME) sector welcomed the Bank of Korea's decision to cut the base interest rate.

The Korea Federation of SMEs issued a statement on the 11th, saying, "Although somewhat delayed, we welcome the Financial Monetary Policy Committee's decision to lower the base interest rate by 0.25 percentage points after 38 months."

On that day, the Bank of Korea's Financial Monetary Policy Committee lowered the base interest rate from the current 3.50% to 3.25%, a decrease of 0.25 percentage points (p), at the monetary policy direction meeting.

The Federation explained, "Despite improvements in export performance, SMEs and small business owners have been facing worsening business conditions due to high interest rates, high debt, and prolonged sluggish domestic demand," adding, "In a survey conducted by the Korea Federation of SMEs last July, 80% of SMEs responded that a cut in the base interest rate was necessary."

It further stated, "Since there have been strong voices in the SME and small business sectors that they could not feel the benefits of reduced financing costs despite previous base rate cuts, we request a thorough review to ensure that the base rate cut leads to lower SME loan interest rates at commercial banks and an expansion of fund supply."

The Federation expressed hope that "starting with this base rate cut, the financial cost burden on SMEs and small business owners will be eased, corporate investment and consumption will expand, and our economy will transition to a new phase of recovery," adding, "The SME sector will also do its best to expand investments that were postponed due to high interest rates and increase employment to support economic recovery."