SEOUL- South Korea’s government and the central bank should pay greater attention to addressing any financial instability, President Yoon Suk-yeol told Reuters, as the money market grapples with a steep selloff amid rising interest rates and a property slump.
“There are increasing opinions that inflation has passed its peak and it’s time to slow down the speed and reduce the breadth of the rate hikes. However we must still continue to closely monitor any possible financial instability,” Yoon said during a broader interview in his office on Monday, when asked if it is time for the Bank of Korea to slow monetary tightening.
Yoon’s comments come as the BOK last week signaled that it could be nearing the end of an unprecedented streak of policy tightening in Asia’s fourth-largest economy to curb inflation.
Yoon spoke hours after the finance ministry and the BOK announced a second round of support measures to ease strains in its short-term money market, as yields on three-month commercial paper reached a fresh 13-year high on Monday.
South Korea’s money market, especially at the short-end of the bill curve, has experienced one of the worst routs in Asia as investors sold-off in the wake of rising interest rates and a broader property market downturn.
The nation’s households are among the world’s most-indebted, and some of them are struggling to meet their repayment schedule as mortgage rates hit a decade-high in the mid-4 percent levels, a recent BOK survey showed.
