Bank of Korea Holds Base Rate at 3.50% for Ninth Consecutive Meeting Amid Household Debt Concerns

The Bank of Korea held its base rate at 3.50% at its 22 February 2024 meeting, extending its streak of consecutive holds to nine. The Monetary Policy Board assessed that maintaining the current rate level was warranted given persistent concerns over household indebtedness and housing market dynamics, even as inflation continued to moderate.

The decision was unanimous among board members. The bank published its post-meeting statement on its official website, noting that the current rate level remained appropriate given the prevailing balance of risks to growth and price stability.

HOUSEHOLD DEBT AND HOUSING PRICES IN FOCUS

Bank of Korea Governor Rhee Chang-yong and the board have stressed that managing financial stability risks is a central part of the rate-setting calculus.

The bank also noted that while credit growth has eased compared with its pandemic-era pace, the absolute stock of household debt continues to weigh on the medium-term economic outlook. Policymakers have been coordinating with financial regulators on macro-prudential measures.

INFLATION SEEN EASING GRADUALLY

The BOK kept its 2024 consumer price inflation forecast at 2.6% and expected price growth to slow gradually over the year.