2024-05-04 05:43:28
Lee: “The U.S. interest rate cut has been delayed.”
Domestic demand is strong, growth forecast upwards inevitable.”
Expert: “Interest rates will likely fall in the 4th quarter at the earliest.”
There are predictions that the Bank of Korea’s base interest rate cut may be later than originally expected. Bank of Korea Governor Lee Chang-yong expressed his opinion that the timing of the interest rate cut should be reexamined from the beginning.
On the 2nd (local time), Governor Lee met with reporters in Tbilisi, Georgia, where he was visiting to attend the Asian Development Bank (ADB) general meeting, and said, “The standards that can be used as a premise for monetary policy have all changed since the Monetary Policy Committee monetary policy meeting in April. “He said, “I think we will have to reexamine from scratch for two weeks until the May meeting.”
Governor Lee cited the following as grounds for reviewing the monetary policy starting point: △a setback in the United States’ base interest rate cut, △Korea’s economic growth rate in the first quarter of this year (January to March) exceeding expectations, △increased international oil price and exchange rate volatility due to the Middle East crisis, etc. Governor Lee said on this day, “Until April, monetary policy was established on the premise that the United States would begin lowering interest rates in the second half of this year (July to December), but as economic indicators in the U.S. turned out to be good, the timing of the cut was postponed.” .
Experts analyzed that Governor Lee’s remarks today were focused on delaying the Bank of Korea’s base rate cut. This means that in a situation where the base interest rates between Korea and the United States are reversed, it will not be easy for Korea to take a move to further widen the interest rate difference between the two countries by lowering the interest rate before the United States.
Governor Lee mentioned the economic growth rate in the first quarter of this year and said, “The domestic economic indicators came out stronger than expected,” and “it is inevitable to adjust the annual economic growth rate forecast upward.” This can be interpreted to mean that as the economy is recovering sufficiently, it has gained momentum to maintain sufficiently high interest rates until price stability is achieved.
Hwang Se-woon, a researcher at the Korea Capital Market Institute, said, “Considering Governor Lee’s remarks, it appears that the Bank of Korea’s base rate cut will occur in the fourth quarter of this year (October to December) at the earliest.” He added, “There is a possibility that the base rate will not be cut within the year.” “He said.
However, there are concerns that if the base interest rate cut is delayed, the enormous interest burden on ordinary people and self-employed people suffering from household debt will continue. There are also concerns that a decline in consumption due to high interest rates will lead to a domestic economic downturn. On the 2nd, the Korea Development Institute (KDI), a national research institute, analyzed that even if interest rates fall in the second half of this year, domestic demand will only recover if we wait until next year.
As the possibility of a base interest rate cut by the Bank of Korea decreased and the weakening U.S. dollar coincided, the exchange rate fell to the 1,360 won range on this day. On this day, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1362.8 won, down 13.1 won from the previous day.
Reporter Lee Dong-hoon [email protected]
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2024-05-04 05:43:28