The MPC Members Who Held the Base Rate Steady 4 Times Say "Additional Hikes May Be Needed"

Bank of Korea Releases Minutes of 13th Monetary Policy Meeting
Variables Including Inflation Rate and Major Countries' Monetary Policies
"Concerns Over Household Loan Increase Due to Real Estate Regulation Easing"

On the 13th of last month, members of the Monetary Policy Committee (MPC) at the Bank of Korea agreed that while the base interest rate was held steady, the possibility of additional hikes should be considered if necessary in the future. This view was expressed in the context that although the inflation rate has slowed down, it is likely to rise again in the second half of the year, and depending on major countries' monetary policies and household debt trends, rate increases may be required.

According to the minutes of the MPC meeting released by the Bank of Korea on the 1st, one MPC member stated, "Considering the possibility of further rate hikes by the U.S. Federal Reserve, the uncertainty in the pace of core inflation slowdown, and the need to curb household debt for future financial stability, I believe it is necessary to maintain a tightening stance for a longer period while also considering the possibility of additional hikes if needed."

Another MPC member noted in the minutes, "Global inflation is declining after peaking, supported by stabilization in energy and raw material prices, but core inflation rates remain high in most countries. Even if liquidity is supplied to vulnerable sectors through regulatory easing when necessary, it would be desirable to implement monetary policy within a framework that reduces the debt-to-GDP ratio."

Concerns were also raised during the meeting that the easing of real estate regulations could lead to an increase in household debt.

One member expressed, "Recently, due to the easing of real estate-related regulations and the decline in mortgage interest rates, housing prices have shown signs of rebounding, and household debt has turned to increase again. There is concern that the achievements of previous policy efforts may be undermined. If expectations for rising housing prices revive, the increase in household debt could expand again, so we need to closely monitor this trend."

Another member said, "Although the relaxation of DSR (Debt Service Ratio) regulations on jeonse deposit return loans is recognized as necessary to stabilize the jeonse market, careful management is required to prevent the formation of expectations that DSR regulations may be eased further in the market."

Yet another member remarked, "As housing transactions show signs of recovery and household loans shift from a declining trend to an increase, attention should be paid to the fact that this could delay or weaken the deleveraging of household debt that has accumulated over a long period."

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