South Korean Central Bank Restrained by Record Debt
A hurdle for further interest-rate cuts
Shoppers browse scarfs at a street stall in the Myeongdong shopping district in Seoul, South Korea, on Sunday, Feb. 15, 2015.
SeongJoon Cho/BloombergThis article is for subscribers only.
Bank of Korea Governor Lee Ju Yeol says the “sharp increase” in household debt was one of the reasons the Bank of Korea held interest rates this month, even as central banks from China to Australia loosened policy in response to slowing growth.
Data this week showing household debt hitting a record 1,089 trillion won ($992 billion) at the end of 2014 escalates the potential negative side-effects of any rate cut. A rise in mortgage lending led to the 29.8 trillion won increase in the October-December quarter, which was the biggest gain since the central bank started keeping data in 2002.