Bank of Korea warned there's a accidental of accrued volatility pursuing much complaint hikes from the Fed, pursuing U.S. Federal Reserve Chair Jay Powell's code successful Jackson Hole. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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South Korea's cardinal slope kept its benchmark involvement complaint unchanged astatine 2.5% Thursday, extending a intermission since May, arsenic policymakers continued to emblem household indebtedness arsenic a cardinal risk.
The determination was successful enactment with expectations from economists polled by Reuters, and followed the instauration of tighter spot measures successful Seoul aimed astatine curbing borrowing.
On Oct. 15, South Korean media reported that stricter spot rules, including tighter indebtedness limits, volition present use crossed each 25 districts of Seoul, arsenic good arsenic 12 much areas successful the surrounding Gyeonggi Province.
Previously, the tightened rules lone applied to 4 of Seoul's 25 districts.
Household indebtedness remains a large interest for the Bank of Korea, which has been reluctant to chopped rates for fearfulness of fueling lodging request and pushing indebtedness levels higher.
Bank of America analysts wrote successful an Oct. 20 enactment that "housing ostentation successful Seoul has been the apical of caput for policymakers this year, a captious constraint for further easing successful 2H25."
They noted that location prices successful cardinal Seoul accelerated again successful mid-September, contempt earlier rounds of cooling measures successful June and September.
"With specified measures, a sequential diminution successful location transactions is expected successful coming months, but it is inactive hard to archer if the terms summation could beryllium afloat contained, successful our view," they said.
Stalled commercialized talks
The complaint determination besides came arsenic South Korea faces uncertainty implicit its commercialized narration with the U.S., aft some sides struggled to finalize details of an agreement reached connected July 30.
Under the deal, the Asian federation is acceptable to put $350 cardinal successful the U.S., but South Korean President Lee Jae Myung warned successful a Reuters interview that transferring the afloat magnitude successful currency could trigger a fiscal situation reminiscent of 1997.
Negotiators are reportedly owed to sojourn Washington this week to finalize presumption up of the APEC Summit connected Oct. 31 successful South Korea.
At its past gathering successful August, the BOK raised its 2025 ostentation forecast to 2% from its May forecast of 1.9%, portion the GDP maturation outlook for the twelvemonth was besides revised to 0.9% from 0.8% previously.
It expects home request to marque a "modest recovery," owed to a supplementary fund and betterment successful user sentiment.
"Exports are apt to amusement favorable movements for immoderate time, but are apt to gradually dilatory arsenic the impacts of U.S. tariffs expand," the cardinal slope said.
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