Banks Warned: "Do Not Raise Loan Interest Rates"

Ensure Full Transmission of Interest Rate Cut Effects
Monitor Interest Rate Situation Through Financial Authorities

Kim Sang-hoon, the Policy Committee Chairman of the People Power Party, warned that commercial banks should not raise loan interest rates following the Bank of Korea's Monetary Policy Committee's decision to cut the base interest rate.

Chu Kyung-ho, floor leader of the People Power Party, is speaking at the floor strategy meeting held at the National Assembly on the 29th. Photo by Kim Hyun-min

At the party floor meeting held at the National Assembly on the 29th, Chairman Kim said, "I urge commercial banks to take this interest rate cut as an opportunity," adding, "Banks should not increase their own loan interest rates so that the effect of the base rate cut is fully passed on to households, businesses, small business owners, and self-employed individuals."

He also added, "We will monitor the interest rate situation of commercial banks through the Financial Services Commission and the Financial Supervisory Service."

Choo Kyung-ho, the floor leader of the People Power Party, explained, "The Bank of Korea's consecutive interest rate cuts amid a high exchange rate and increasing global economic uncertainties seem to reflect the urgent need to respond to the economic downturn after certain conditions for rate cuts were established," adding, "The consumer price inflation rate has remained stable in the 1% range for two consecutive months, and the rise in household debt and housing prices has somewhat slowed down."

The Bank of Korea's Monetary Policy Committee lowered the base interest rate from 3.25% to 3% the day before. This marks the second consecutive rate cut since the monetary policy eased for the first time in 38 months last month. The Bank of Korea has only implemented consecutive base rate cuts twice before: from July to September 2001 during the dot-com bubble shock, and from October 2008 to February 2009 during the global financial crisis.