SEOUL- A board member of South Korea’s central bank said on Wednesday household debt growth could take center stage in policy discussions again amid an upswing in property prices, adding to views that the current easing cycle may end sooner than expected.
“The interest rate cut cycle has begun and we may be able to (additionally) cut rates without harming price stability but we might be brought back into discussions about (stabilizing) home prices and household debt as we did before,” Chang Yong-sung, one of the Bank of Korea’s seven voting board members told a news conference.
“In fact the FX market situation is still on (our) mind too.”
The BOK on February 25 cut interest rates by 25 basis points to 2.75 percent, the third reduction since it started cutting borrowing costs from a 15-year high in October, positioning Korean rates around 150 basis points below the US Federal Reserve’s target range of 4.25-4.50 percent.
Most analysts anticipate two more rate cuts to 2.25 percent by the end of the year, despite the consensus that the Federal Reserve will likely implement fewer or no cuts in the coming months.
