Bank of Korea to announce base interest rate through monetary policy meeting in November

By Kim Joo-heon Posted : November 27, 2023, 15:12 Updated : November 30, 2023, 14:51
Aju News Data
[Aju News Data]
SEOUL -- South Korea's central bank will announce the country's base interest rate during the last monetary policy meeting on November 30. The benchmark interest rate, which is at 3.5 percent, has remained unchanged for the sixth consecutive time since February 2023 amid growth deceleration and increased uncertainties, including the conflict between Ukraine and Russia, and concerns over rising household debts.

The Bank of Korea (BOK) will determine the base interest rate through this year's last monetary policy board meeting on November 30. However, South Korean monetary authorities predict that the committee will freeze the policy again. "As the United States Federal Reserve is likely to prolong its cautious policy stance to mitigate monetary policy risks, the BOK's interest rate cut is likely to face a delay," said Cho Yong-gu, an analyst at domestic financial service provider Shinyoung Securities.

Cho added cutting the current rate cut could be difficult until the first half of 2024 due to a soft landing in the global economy and projections for inflation. The U.S. Fed decided to freeze the benchmark interest rate twice at 5.25~5.5 percent in September and November after raising it by 0.25 percentage points in July. 

South Korea's household debt will also be a crucial factor in determining the interest rate. Despite the prolonged period of high interest rates, demand for housing funds has surged, leading to a domestic household debt scale reaching a historic high of 1875.6 trillion won ($1.4 trillion) as of the third quarter of 2023.

The BOK revealed that the total amount of loans of self-employed individuals in South Korea reached a record high of 1,043.2 trillion won as of the second quarter of 2023. The total loan balance has exceeded one thousand trillion won for four quarters since the third quarter of 2022.   
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