Lee Bok-hyun: "PF Default Cannot Be Deferred Based on Interest Rate Cut Expectations"

Lee Bok-hyun, Governor of the Financial Supervisory Service, is holding a press conference on the 4th at the Financial Supervisory Service in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

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Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), mentioned the unexpected inflation situation in the United States and urged that accounting audits related to real estate project financing (PF) be handled according to principles.

On the morning of the 14th, Governor Lee held an FSS executive meeting and stated, "We must manage so that real estate PF insolvencies are not deferred by riding on expectations of interest rate cuts by the U.S. Federal Reserve (Fed)."

The executive meeting was convened due to concerns about financial market volatility following the release of the U.S. Consumer Price Index (CPI) for January. The January CPI announced on the 13th (local time) rose 3.1% year-on-year, exceeding the forecast of 2.9%. It also increased 0.3% month-on-month, surpassing the expected 0.2%. As a result, the three major U.S. stock markets closed lower, and U.S. Treasury yields surged.

Governor Lee emphasized, "Given that domestic and international potential risk factors remain, there is a possibility that high volatility will continue during the first half of the year," and added, "Market participants, including financial companies, should be cautious not to use excessive leverage due to overly optimistic expectations of interest rate cuts."

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