[2024 National Audit] Financial Supervisory Service Chief: "Lowering Base Interest Rate by 25bp Will Reduce Loan Interest Burden by Trillions"

by Park Eugenie

Published 17 Oct.2024 11:50(KST)

Lee Bok-hyun, Governor of the Financial Supervisory Service, is taking the oath as a witness at the National Assembly's Political Affairs Committee's audit of the Financial Supervisory Service held on the 17th. Photo by Kim Hyun-min

Lee Bok-hyun, Governor of the Financial Supervisory Service, stated that "if the base interest rate is lowered by 25 basis points (0.25 percentage points), it is analyzed that from one or two months later, a substantial interest burden reduction effect amounting to hundreds of billions or even trillions of won will appear for many borrowers."

At the National Assembly's Finance and Economy Committee audit on the 17th, Governor Lee responded to Democratic Party lawmaker Kim Byung-gi's criticism that the rise in loan interest rates is increasing the financial burden on existing borrowers and real demanders by saying that such an analysis had been conducted within the Financial Supervisory Service.

Governor Lee explained, "Many loans use the base interest rate as a benchmark rate," adding, "If an additional base rate cut occurs, internal analysis has been completed and reported, indicating that there would be not only macroeconomic effects but also a consumption stimulation effect."

However, he emphasized, "We will do our best to ensure that the Bank of Korea's base rate cut does not immediately lead to an accommodative monetary policy," and stressed, "Strict management of new loan increases will continue."