The exchange rate is soaring while growth is slowing...As long as interest rates grow deeper [Anchor Report]

Bank of Korea cuts key rate by 0.25%p on 11th in line with global rate cut stance,
Further cuts are needed to stimulate the

economy and reduce the interest burden on ordinary people such as self-employed people, but there are many obstacles such as exchange rates and household debt.

Let me summarize it briefly.

The base rate directly affects the value of the country's currency.

In general, raising the base rate compared to the other country increases the value of the currency, and lowering the base rate lowers the value of the currency.

However, the exchange rate has risen even though the difference in the benchmark interest rate between the United States and Korea has recently narrowed from 2%p to 1.75%.

In other words, the value of our currency has fallen further.

The won/dollar exchange rate has recently soared to over 1,400 won,

If we lower the benchmark interest rate, the exchange rate could soar further, so we're cautious.

In addition, when the exchange rate rises, raw material prices rise, so prices that seemed to be stabilized can be shaken again.

This is why Bank of Korea Governor Lee Chang-yong, who is attending the G20 finance ministers and central bank governors meeting, said, "The exchange rate, which was not a factor to consider until last time, has come back as a factor to consider (monetary policy)."

In addition, unstable housing prices and household loans are also cited as grounds for opposition to interest rate cuts.

This is because there is a high concern that if the loan interest rate is lowered, the money released on the market will flock to real estate, leading to an increase in housing prices and household debt.

This is why financial authorities have recently expanded regulations on mortgage loans before and after interest rate cuts.

However, there are many opinions that interest rate cuts should not be delayed.The interest burden on ordinary people, especially self-employed people, who borrowed at the time of

high interest rates is no longer bearable.

In addition, it is not light that the growth of our economy has stopped.

Korea's economic growth rate in the third quarter, announced by the Bank of Korea on the 24th, was 0.1%, far below expectations of 0.5%.

It is therefore pointed out that to stimulate the economy, interest rates should be lowered before it is too late to stimulate investment and consumption.

'Economy' Stimulus or Financial 'Stability'

The calculation method of the Bank of Korea is becoming more complicated.