In a meeting on Thursday, the Bank of Korea decided to keep its key interest rate at 2.50%. This decision comes amid growing concerns regarding financial stability due to increasing mortgage debt.
Overview of the Bank's Decision
The central bank's seven-member board voted to maintain the rate at 2.50%. This outcome was in line with the expectations of 27 out of 35 economists polled by Reuters.
Economic Forecasts and Current Status
The Bank of Korea nudged its 2025 economic growth forecast to 0.9% from 0.8%, marking the slowest growth since 2020. Concurrently, its inflation outlook was raised to 2% from 1.9% in May. The bank noted that inflation remains under control, but sharply rising home prices in Seoul and increasing household debt levels require close monitoring.
Negative Factors and International Agreements
Among the negative factors are concerns about the rising debt after four rate cuts last year and uncertainty regarding US tariffs. However, protective measures for domestic demand and improving consumer confidence are expected to support the economy. Notably, the recent meeting between South Korean President Lee Jae-myung and US President Donald Trump resulted in agreements that could stimulate economic cooperation.
Thus, the Bank of Korea continues to monitor the economic landscape and financial stability, considering both domestic and external factors.
