Banks’ Lending Rate in Seoul Increases Slightly in September Amid Economic Slowdown

SEOUL, South Korea - The lending rate applied to new loans by banks increased marginally in September, according to preliminary data released on Friday by the Bank of Korea (BOK).

According to a new release by Yonhap News Agency, the average lending rate for new loans in September stood at 5.17 percent, an increase of 0.07 percentage point compared to the previous month. This increment comes as the central bank has kept its key rate unchanged for several months, amid mitigating inflation and a decelerating economy.

In August, the Bank of Korea held its key interest rate at 3.5 percent for the fifth consecutive time, considering the economic slowdown and moderating inflation. This followed a series of seven rate hikes that took place from April 2022 to January 2023. The central bank decided to keep the policy rate frozen again this month.

Additionally, the rate charged by banks for deposits rose to 3.81 percent in September, up from 3.65 percent a month earlier. The data from the Bank of Korea also showed that the spread between banks' lending and deposit rates narrowed to 1.36 percentage points in September, down from 1.45 percentage points in the preceding period.

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