SEOUL – A member of the Bank of Korea (BOK)'s monetary policy board stated on Tuesday that a prospective reduction in interest rates is unlikely to significantly affect the housing market. Despite the BOK holding its key rate constant at 3.5 percent for the ninth consecutive session, amidst concerns over sluggish inflation moderation and high levels of household debt, there is anticipation of a shift towards monetary easing post-June as inflation eases and private spending declines. The board member, Suh Young-kyung, addressed the common belief that lower interest rates typically lead to increases in home prices and household debt, suggesting that, under the current economic conditions, such outcomes are not expected.
According to Yonhap News Agency, while the central bank has adhered to a restrictive monetary stance, a moderate rate adjustment is deemed insufficient to disrupt financial stability. She highlighted the critical role of public expectations in influencing trends in household debt and property values. Despite the usual correlations between interest rates, debt, and housing prices, she noted that the current economic indicators, such as the deceleration in household debt increase and the stabilization of home prices, do not support a heightened risk scenario.