Anchor: The central bank has left the key lending rate unchanged at two-point-five percent. The freeze, announced Thursday, came in response to soaring housing prices in the capital region and elevated household debt.
Choi You Sun reports.

Report: The Bank of Korea(BOK) on Thursday decided to leave the key interest rate steady at two-point-five percent during the Monetary Policy Board’s fifth policy meeting of the year.

Speaking to reporters after the decision, BOK Gov. Rhee Chang-yong explained that the rate freeze was necessary considering the increase in housing prices in the capital area.

[Sound bite: Bank of Korea Gov. Rhee Chang-yong (Korean-English)]
“The biggest changes in the policy environment since the previous meeting in May have been the overheating of the housing market in the capital region and the increase in household debt, which have significantly raised concerns about financial imbalances.
“Under the circumstances, the board deemed it necessary to cool down the overheated housing market by freezing the benchmark interest rate to prevent excessive anticipation for a rate cut, and to examine the impact of the government’s recent measures to tackle household debt.”

The central bank believes the growth outlook for the nation’s economy depends on the ongoing tariff negotiations with the U.S.  

[Sound bite: Bank of Korea Gov. Rhee Chang-yong (Korean-English)]
“Growth is subject to both upside risks from the supplementary budget and downside risks from the U.S. tariff policy, and since the growth path could change significantly depending on the outcome of the negotiations with the U.S. through the end of July, the board decided there is room to respond after monitoring related developments.”

The bank, meanwhile, said inflation should remain relatively stable and post around two percent for the entire year.

The outlook comes after inflation edged up to two-point-two percent in June, with core inflation staying at two percent.

Externally, the BOK mentioned uncertainties after the U.S. posted negative on-quarter growth in the April-June period, and as manufacturing sectors in China and Europe continue to report lackluster performance figures.

It forecast that changes in the global trade environment and the monetary policy moves of major economies will have a significant impact on the world economy.

The central bank said it will comprehensively consider policy conditions at home and abroad, as well as inflation and financial stability, in its next rate-setting decision.
Choi You Sun, KBS World Radio News.