(Bloomberg) -- South Korea could have reduced its reliance on debt more during the latest period of elevated interest rates, a Bank of Korea member said, warning that the failure to do so could limit the scope for future growth.
The unnamed official expressed concerns that an increase in household debt is accelerating recently as the property market heats up, in comments contained in the minutes from the July 11 meeting released Tuesday.
The member was part of the unanimous decision to hold the benchmark interest rate at 3.5%, as BOK Governor Rhee Chang-yong said the board was worried early signals of a cut could reignite financial imbalances.
Other members also expressed their concerns over a resurgence in household debt, especially mortgages. Still, one member said the slowdown in consumer inflation has fulfilled a necessary condition for a rate cut.
The BOK is mulling the timing of a rate cut after holding policy steady since early 2023, seeking to ensure financial stability while avoiding undermining economic momentum. The BOK holds its next decision on Aug. 22.
©2024 Bloomberg L.P.
