Lee Bok-hyun "High interest rates persist, expectations of rate cuts remain, preparing for both-sided risks"

Director Lee Bok-hyun Presides Over 'Financial Situation Review Meeting'
US Fed Holds Policy Rate at 5.25?5.50%... Uncertainty Over Rate Cuts Remains
Thorough Evaluation and Management of Real Estate PF Viability... Strengthened Post-Management

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"As we are currently in a period where the sustainability of high interest rates and expectations for rate cuts coexist, please thoroughly manage key issues by preparing for risks in both directions."

On the 13th, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), held a financial situation review meeting at the headquarters in Yeouido, Seoul, making this request as the U.S. Federal Reserve (Fed) kept the policy interest rate steady at 5.25?5.50%. Last week, while the European Central Bank (ECB) and Canada lowered their benchmark interest rates, the Fed reduced its forecast for rate cuts this year, leading to the judgment that uncertainty about future rate cuts remains.

Governor Lee first urged strict management to ensure that project financing (PF) feasibility evaluations are not leniently conducted based on expectations of rising real estate prices, and requested strengthening of post-management such as on-site inspections. The financial authorities plan to promptly disburse funds following the launch of bank and insurance sector PF syndicated loans to promote capital circulation in the PF market and support stable PF restructuring.

Additionally, as delinquency rates have recently risen in some small and medium-sized financial companies, he asked for a re-examination of liquidity and soundness, communication with management, and proactive management to prevent the risk from spreading to systemic risk by inducing capital increases if necessary. He also ordered that, since the previously stable household debt growth rate may accelerate due to expectations of rate cuts and housing market recovery, the annual household debt growth rate should be managed within an appropriate level through the smooth implementation of previously announced institutional improvement tasks.

Furthermore, Governor Lee emphasized the need to strengthen consumer protection measures, such as spreading investment precautions, in relation to the expansion of investments by individuals in high-risk investment products sensitive to interest rates.

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