Financial Services Commission Chairman: "BOJ's Interest Rate Freeze Creates Room for Loan Rate Cuts"

"Stable Procurement Costs... Possible Flat or Downward Trend if Additional Interest Rate Lowers"

[Image source=Yonhap News]

On the 26th, Kim Ju-hyun, Chairman of the Financial Services Commission, stated that loan interest rates may remain stable or even decrease slightly due to the Bank of Korea's decision to keep the base interest rate unchanged.

Chairman Kim appeared on KBS Sunday Diagnosis that morning and said, "Since the funding cost index (COFIX) and other funding costs that determine loan interest rates are stabilized by the base rate freeze, if banks lower the additional interest rate, there is a greater possibility that loan interest rates will not rise or may even fall."

Regarding the Bank of Korea's decision to keep the base rate unchanged, Chairman Kim said, "Inflation appears to be stabilizing somewhat, but concerns about growth were significant enough to lower the growth rate forecast from 1.7% to 1.6%. Also, since the effects of interest rate adjustments take time to manifest, this decision can be understood as a comprehensive judgment to observe those effects."

On whether the U.S. Federal Reserve (Fed) will raise the base interest rate further, he said, "The reports from the U.S. indicate that employment and the economy are better than expected, but inflation is not falling as quickly as hoped. In that sense, concerns about the possibility of additional rate hikes are valid."

Chairman Kim also addressed the controversy raised by President Yoon Seok-yeol regarding the banking sector's 'money feast,' stating, "Customers are struggling due to interest rates, yet banks are reporting record-high profits from interest, and with discussions about high bonuses, there is a shared sense of unfairness. We are preparing to promote more practical and fair competition in the banking sector to transform areas where services are either inadequate or provided inefficiently at very high costs, so that competition can be encouraged and ultimately benefit consumers."

This content was produced with the assistance of AI translation services.