Shin Sung-hwan, Monetary Policy Committee Member, "Base Rate Decision Focused on Easing Downside Pressure on Economy"

Household Debt, Housing Prices, and Exchange Rates:
Financial Stability Remains a Key Focus
Timing and Pace of Further Rate Cuts to Be Determined Carefully

"Future monetary policy will focus on alleviating downside pressure on the economy. However, the timing and pace of additional rate cuts will be determined with careful attention to financial stability factors such as household debt, housing prices, and exchange rates."

On the 13th, Shin Seong-hwan, a member of the Monetary Policy Committee of the Bank of Korea, stated this in a message as the chair of the Monetary and Credit Policy Report, saying, "With inflation stabilized, low growth is expected to continue for the time being."

Shin Sung-hwan, Monetary Policy Committee Member, Bank of Korea

Commissioner Shin pointed out that since August last year, while inflation stabilization and a slowdown in household debt have continued, domestic and international political and economic uncertainties have significantly increased, intensifying downside pressure on growth. Considering these changing conditions, the Bank of Korea shifted its monetary policy stance by cutting the base interest rate three times since October last year, totaling 0.75 percentage points (75 basis points).

From a growth perspective, it is necessary to examine not only the economic improvement effects of the three rate cuts but also factors that may limit these effects, such as increased domestic and international uncertainties, accumulation of household debt, and weakening external competitiveness of key industries. From a financial stability perspective, there is a need to be cautious about the possibility that the upward trend in housing prices in some areas of Seoul may spread to other regions amid the ongoing rate cut stance. Commissioner Shin said, "The foreign exchange market remains cautious due to persistent high domestic and international uncertainties, so it is necessary to continuously monitor related uncertainty factors."

He also emphasized the need to carefully observe the increasing difficulties faced by vulnerable sectors such as self-employed individuals amid the slowing economic growth. He stated, "In such cases, it is a situation that requires coordination with fiscal policy rather than responding solely through monetary policy."

He called for efforts to improve the economic structure through structural reforms. Commissioner Shin said, "Since structural factors, as well as cyclical factors, play a significant role in the low growth trend, efforts to improve the economic structure through structural reforms should be pursued alongside cyclical policy measures to restore growth."