'U-turn' from monetary tightening to easing for the first time in three years and two months

[Anchor]
The monetary authority made its first rate cut in three years and two months after raising its key interest rate to keep prices under control, shifting its monetary policy stance 180 degrees from tightening to easing.

Analysts say the U.S. has preemptively cut interest rates and changed its stance on the judgment that prices and household debt have stabilized.

Reporter Ryu Hwan-hong reports.

[Reporter]
A month after the U.S. central bank cut interest rates by 0.5 percentage point last month and made a big cut, the Bank of Korea also joined the monetary easing queue.

The BOK's Monetary Policy Board cut its key interest rate by 0.25 percentage point as market expected, changing its monetary policy stance three years and two months after raising rates since August 2021.

As a result, the difference in the benchmark interest rate between Korea and the United States, which was narrowed to 1.5% last month as the U.S. made a big cut, widened again to 1.75%.

Consumer price growth fell to the 1% level last month and the recent slowdown in home price and household debt growth were behind the rate cut, the central bank said.

The rise in apartment prices in Seoul has slowed for four consecutive weeks, and the sharp increase in household debt has fallen to half last month.

Six out of seven members of the Bank of Korea's Monetary Policy Committee agreed to the decision to cut interest rates, and the Bank of Korea also left open the possibility of a rate cut in the future.

[Lee Chang-yong / Governor of the Bank of Korea: Regarding the direction of monetary policy management in the future, we believe that it is necessary to gradually adjust the base rate to a neutral level as inflation is expected to stabilize at the target level.]

Governor Lee Chang-yong said, "We are not in a situation where we will make a big cut like the U.S., and we will decide the speed of the cut while looking at the financial stability situation."

[Lee Chang-yong / Governor of the Bank of Korea: We're going to drop by 50 basis points overseas, so we're going to drop by 50 basis points, so there's no problem with borrowing money, so we warned you not to think like this.]

{영}If you want to make a 'gap investment', you will have to consider how much you can afford.

I'm YTN's Ryu Hwan Hong.