BOK board member Chang said property market risks need further checks, minutes show

SEOUL : A voting Bank of Korea board member, Chang Yong-sung, who dissented in its decision to cut interest rates on Oct. 11, said any rate reduction should be delayed to prevent further spikes in property prices, minutes from the bank’s meeting showed.The BOK voted 6-1 to cut policy interest rates to 3.25 per cent earlier this month as uncertainties regarding the future path of output increased while headline inflation in September undershot the bank’s 2 per cent target.
“Sharp property price increases in wider metropolitan areas and subsequent household debt growth are very worrisome,” said Chang, according to the minutes published on Tuesday.
“We need more time to check home prices as well as the household debt growth trend, and as such policy interest rates need to stay at the current 3.50 per cent.”
Most board members saw reduced systemic risks from household debt as property prices began to stabilise from September onwards, but many noted global oil prices need monitoring as any further escalation of geopolitical risks in the Middle East could increase import costs by pushing up energy prices.
Governor Rhee Chang-yong on Tuesday said he sees Asia’s fourth-largest economy expanding about 2.2 per cent this year, slower than the annual growth projection of 2.4 per cent made earlier.