Key facts
- Bank of Korea board member Chang Yong-sung said future interest rate decisions will be based on inflation and growth assessments.
- The BOK noted that financial imbalances have been building up, partly due to persistent high home prices.
- Household debt stood at 85.3% of GDP at the end of March, higher than the average of 84%.
The Bank of Korea (BOK) will assess inflation and economic growth to guide future interest rate decisions, according to board member Chang Yong-sung. The central bank also expressed concerns about accumulated financial imbalances, the rising debt burden, and potential market volatility.
In its financial stability report, the BOK stated that while the country's financial system remains relatively stable due to the resilience of financial institutions, the possibility of vulnerable sectors weakening further and increased market volatility persists. Financial imbalances have been exacerbated by rising home prices. At the end of March, household debt stood at 85.3% of the nation's gross domestic product (GDP), exceeding the long-term average of 84%. The BOK highlighted the need for vigilance against potential liquidity risks for financial institutions, especially in light of potential Federal Reserve policy changes and geopolitical risks in the Middle East.