Seungbeom Go "Interest Rate Rise Inevitable... Time for Households and Businesses to Prepare"

Financial Services Commission Chairman Holds FSC Executive Meeting

Financial Services Commission Chairman Ko Seung-beom is delivering opening remarks at the ruling party-government consultation on credit card fee reform held at the National Assembly on the 23rd. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jin-ho Kim] Ko Seung-beom, Chairman of the Financial Services Commission, commented on the Bank of Korea's decision to raise the base interest rate, stating, "With the global tightening clock moving forward, the trend of rising interest rates is inevitable."

Chairman Ko made these remarks at a Financial Services Commission executive meeting held at the Government Seoul Office on the 14th. He said, "From now on, thorough risk management must be ensured." The Bank of Korea's Monetary Policy Committee raised the base rate by 0.25 percentage points from 1.00% to 1.25% that morning.

Chairman Ko urged, "Economic agents such as households and companies should move away from the perception that low interest rates are a constant and prepare for a full-fledged phase of rising interest rates." In particular, he emphasized, "The private sector should reduce unnecessary debt by borrowing within their repayment capacity and repaying gradually through customary practices. Risk-seeking behaviors, such as excessive leverage to invest in overvalued assets, should also be restrained."

Furthermore, he stated, "Financial institutions must carefully analyze the potential increase in default risks due to rising interest rates and build sufficient buffers such as loan loss provisions." He urged, "Please pay special attention to not neglect expanding crisis response capacity due to short-term performance and profit-seeking."

Regarding financial authorities, he ordered that the household debt management stance be maintained without wavering and that the debt growth trend be normalized. Chairman Ko said, "We will expand the supply of fixed-rate loans to reduce the shock of rising interest rates, activate the right to request interest rate cuts, and strengthen credit recovery support."

He added, "While sufficiently supporting the necessary funds to reduce the debt burden of small business owners facing difficulties, we will guide a gradual soft landing. We also plan to prepare preemptive measures for risks in the non-bank sector in response to external shocks and check whether the financial sector has sufficient loss absorption capacity."

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