Bank of Korea: "October Decision Key for Further Rate Cuts... Still Cautious on Seoul Home Prices"

Bank of Korea Monetary and Credit Policy Report Briefing

Jongwoo Park, Deputy Governor of the Bank of Korea, stated on the 11th regarding the timing of an additional base rate cut, "We will make decisions by considering both the impact on growth and the impact on financial stability." He indicated that the decision in October would be important regarding the possibility of two more rate cuts this year. Concerning the housing market in the Seoul metropolitan area, which is cited as a reason for moderating the pace of rate cuts, he said the government's real estate measures are expected to help ease expectations of rising home prices. However, he also expressed caution, noting, "Major areas in Seoul are still experiencing an upward trend."

Jongwoo Park, Deputy Governor of the Bank of Korea, is speaking at the Monetary and Credit Policy Report (September 2025) press briefing held at the Bank of Korea in Jung-gu, Seoul, on the morning of the 11th. Provided by the Bank of Korea

Deputy Governor Park made these remarks at the Monetary and Credit Policy Report briefing held at the Bank of Korea in Jung-gu, Seoul, on this day.

Regarding the growing expectations for a base rate cut in the United States, Park said, "If that happens, and if volatility in the foreign exchange market eases, we will have more room to focus on domestic conditions when considering monetary policy." He added, however, "It is not a mechanical decision to follow the U.S. rate cuts. We will decide after reviewing financial stability, growth, and inflation conditions. Since there is still time until the October Monetary Policy Board meeting, it is too early to make any predictions."

When asked whether growth or financial stability is being prioritized in rate decisions, he replied, "With rate policy, there are gains and losses. At this point, we are moderating the pace with financial stability risks in mind, but both factors are being considered, and it is not possible to say which is more important."

He also pointed out that both the level of interest rates and real interest rates must be considered in rate decisions. Deputy Governor Park explained, "So far, we have cut by 1 percentage point, starting from 3.5%. In terms of the neutral rate, we are at about the middle level, and with further cuts, we could move into a more accommodative range. The United States has also cut by 1 percentage point, but they are now entering the neutral range, so the situations are different."

Regarding the government's September 7 measures, which focus on supply following the June 27 household loan regulations, Park assessed that the government has introduced necessary measures in a timely manner. He said, "Following the demand-side measures in June, this time the government has announced supply-side measures, so I believe this will help ease expectations for price increases. However, the extent of the effect will depend on how timely the measures are implemented and the resulting impact on market expectations." On the situation in the Seoul metropolitan housing market, he stated, "Major areas in Seoul are still on an upward trend, and the scale of the increase is by no means small, so we remain cautious."

Regarding the criteria for assessing financial stability, he said, "It cannot be judged by a single indicator," and added, "We will comprehensively consider factors such as the balloon effect to other regions, and the extent and speed of the slowdown compared to the historical average rate of price increase."

Meanwhile, the Bank of Korea stated in its Monetary and Credit Policy Report released on this day, "We will operate monetary policy with due attention to financial stability while monitoring future growth trends." The bank cited the impact of U.S. tariff policies, the continued rise in housing prices in the Seoul metropolitan area, the trend of household debt stabilization, and the potential for renewed exchange rate volatility as variables for future monetary policy.