In December last year, the Bank of Korea announced the Integrate Policy Framework (IPF). In contrast to the advanced countries that generally determine the benchmark interest rate based on growth and inflation, Korea, which is not a key currency country, should take greater consideration into account financial stability. Those kinds of financial stability can be considered both externally and internally. Household debt internally, exchange rates externally. Yes, you can write “actual household debt” and read “real estate.” And when the U.S. base rate is more likely to be higher than Korea’s, a massive capital outflow can be realized if the U.S. base rate is sloppily cut. And those signs can be seen through the exchange rate. Yes, we tried to supply the won liquidity by cutting the base rate, but when the exchange rate jumps due to capital outflow and the market liquidity flows out… Then you’re in a difficult situation where liquidity is tightening. Then you’ll have to be careful about lowering the benchmark interest rate.

We’re going to last May. Our growth forecast was only 0.8 percent. It was expected to be the same as 0.8 percent in 2009 during the financial crisis. And in terms of growth, we increased the likelihood of a rate cut. And the consumer price index stayed around 2 percent, not at all holding back the base rate cut. And so the Bank of Korea’s Monetary Policy Committee even said that if you look at growth and prices, you can cut the base rate right away. But… there are two more things. Household debt and exchange rates. And the real estate market was very unstable at the time… We had to be careful about cutting the benchmark interest rate here. So even when we cut the benchmark interest rate in May, there was a lot of talk about household debt and real estate. But… the logic that this can’t be solved by the base rate has been bolstered, and household debt growth has slowed down for a while with the 6.27 measures that limited loans to 600 million. And now, though I’m lost in my memory… As the dollar’s exchange rate fell to KRW 1347, expectations for stabilizing the exchange rate increased. At that time, I got a boost from the expectation that Trump would back the Fed and cut interest rates a lot. Yes… Growth is weak, prices are stable, household debt growth is slowing down for a while, exchange rates are very low. So there’s no reason not to cut interest rates. So… At the time, it was said that the benchmark interest rate could go down to 1.5 to 1.75%. With this expectation, the domestic market interest rate has plunged to the bottom, but now… The mood has changed a lot.

First of all, the won-dollar exchange rate is threatening the 1,480 won level again. In response, the government-led foreign exchange authorities are also hinting at a strong response. Interest rate cut in this atmosphere… It won’t be easy. And when real estate prices jumped again in September after the 6.27 countermeasure… I pressed it again with the 10.15 countermeasure. However, are there still high expectations for a rise in real estate prices… It’s not easy to stabilize property prices. It’s not going to be easy to give a strong signal of a rate cut here either. The consumer price index in September was up 2.4% year-on-year. Yuck. It’s over 2%… Yesterday, the Bank of Korea raised its forecast for growth to 1.0 percent for this year and 1.8 percent for next year. It is said that 1.8 percent growth is appropriate… If that growth rate is expected… There is no reason to stimulate the economy by lowering interest rates. The government’s finances are also… It will be raised from 670 trillion won this year to 730 trillion won next year. If the role of finance increases, the BOK may relatively ease the burden of lowering interest rates. Yes, then growth has risen, prices have risen, household debt is still unstable, the exchange rate is high. Ugh… So, there’s a fear that the cut in the benchmark interest rate is going to end here, and the BOK governor’s comments have had a lot of resonance here.

At the press conference, the comment, “The current interest rate is appropriate considering financial stability,” came out. The appropriate interest rate… It could be lower than now considering growth and inflation. Then, we should lower the interest rate more, right? But… Financial Stability… So, if you take into account household debt and the exchange rate, you don’t have to cut the base rate that much, you’re saying it’s a good time. Yes… If you look at growth and prices, you have to lower interest rates more, but… The other two things… especially now, do I have to say that the exchange rate is holding back? If this continues… Further rate cuts can become quite difficult. So… as expectations of a significant drop in the benchmark rate are quickly eliminated… Market interest rates that were previously down are now being curled up quickly. Some of the actual deposit rates show 3%… Why short-term interest rates have been rising so fast recently… It can be considered to be quite related to the exchange rate.

And in the previous day’s press conference, the governor of the central bank expressed his concern about the rise of the exchange rate, although of course it is different from national defaults such as the past foreign exchange crisis… the rise of the exchange rate is excessive… There were a couple of possible side effects that were mentioned. First of all, there was talk that the exchange rate could be a factor in driving up prices. Then there would be the exchange rate level itself, but it would be difficult to cut the benchmark interest rate as it would touch prices. So there would be a high interest rate fair in high prices… The lives of ordinary people can get tight. We have a lot of household debt. T.T And there’s also a sense of caution about portfolio concentration. Personally, this is a really big concern…. It’s the part where you have a lot of thoughts. We’ll talk more about this in the future.

Then is the base rate cut over now… One thing you have to see is… growth and prices… In itself, the pace of change is very slow, but… Financial Stability Part.. Especially in the case of the exchange rate, it has a very large amplitude… If there’s something about the exchange rate stabilizing quickly, then there’s hope again. I think it’s been two or three weeks… I’ve explained why exchange rates and interest rates are running together… When the exchange rate stabilizes… Expectations for a key rate cut could reignite