Xinhua, Seoul :
South Korea’s central bank on Tuesday froze its policy rate at a record low of 2 percent, refraining from altering the rate for four straight months, amid various uncertainties such as growing household debts at home and the US Federal Reserve’s possible interest rate increase. Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy board members decided unanimously to keep the benchmark seven-day repurchase rate on hold at 2 percent.
Despite uncertainties at home and abroad, the BOK was widely expected to freeze the rate as the bank lowered it in August and October in 2014.
The bank sought to wait and see the effect from the previous rate cuts amid growing household debts caused by easing regulations on mortgage financing and a decline in lending rate stemming from the policy rate cut.
Debts owed by households to banks amounted to 562.3 trillion won (511 billion U.S. dollars) as of end-January, up 1.4 trillion won from a month earlier.
Loan demand from households tended to fall in January when companies pay year-end bonuses and the housing market is seasonally weak.
The unusual increase came as the financial regulator eased regulations on mortgage financing, resulting in brisk housing transactions. Nationwide home transactions soared 34.1 percent to 79,320 in January, logging the highest January figure since the data began to be compiled in 2006.
South Korea’s central bank on Tuesday froze its policy rate at a record low of 2 percent, refraining from altering the rate for four straight months, amid various uncertainties such as growing household debts at home and the US Federal Reserve’s possible interest rate increase. Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy board members decided unanimously to keep the benchmark seven-day repurchase rate on hold at 2 percent.
Despite uncertainties at home and abroad, the BOK was widely expected to freeze the rate as the bank lowered it in August and October in 2014.
The bank sought to wait and see the effect from the previous rate cuts amid growing household debts caused by easing regulations on mortgage financing and a decline in lending rate stemming from the policy rate cut.
Debts owed by households to banks amounted to 562.3 trillion won (511 billion U.S. dollars) as of end-January, up 1.4 trillion won from a month earlier.
Loan demand from households tended to fall in January when companies pay year-end bonuses and the housing market is seasonally weak.
The unusual increase came as the financial regulator eased regulations on mortgage financing, resulting in brisk housing transactions. Nationwide home transactions soared 34.1 percent to 79,320 in January, logging the highest January figure since the data began to be compiled in 2006.
