[2024 National Audit] Criticism of Interest Rate Cut Delay... Lee Chang-yong Says "Please Evaluate After One Year"

Lee Chang-yong, Governor of the Bank of Korea, is attending the National Assembly's audit of the Bank of Korea held by the Planning and Finance Committee at the Bank of Korea in Jung-gu, Seoul on the 14th, responding to questions from lawmakers. Photo by Kang Jin-hyung aymsdream@

Lee Chang-yong, Governor of the Bank of Korea, requested that the criticism of delayed interest rate cuts raised in the political sphere be evaluated after one year.

At the National Assembly's Planning and Finance Committee's audit of the Bank of Korea on the 14th, Governor Lee said, "Judgments on whether the timing of the interest rate cut was appropriate may vary depending on the perspective," and added, "Please evaluate whether this was the right choice after about one year."

Regarding the criticism that the interest rate cut was delayed, he explained, "We had to consider financial stability aspects such as household loans and real estate, and since household debt among self-employed individuals has accumulated significantly due to low interest rates, structural issues also needed to be taken into account."

He also revealed that the base rate was lowered by only 0.25 percentage points, rather than a big cut (0.5 percentage points reduction) like in the United States, due to concerns about stimulating the real estate market.

Governor Lee said, "If the base rate is lowered by 0.5 percentage points, the real estate demand group would think it is time to buy real estate," adding, "Once real estate prices rise, it is difficult for them to fall again, so expectations had to be controlled."

He also expressed a cautious stance on further interest rate cuts due to concerns about household debt. Governor Lee emphasized, "I understand the difficulties of the self-employed and that interest rates need to be lowered quickly for that, but there is a possibility of an increase in real estate prices in the metropolitan area," and added, "We will decide on interest rates while considering financial stability."