South Korea’s central bank held its policy rate at 2.5% Thursday, as it assesses the impact of recent measures aimed at cooling Seoul’s housing market.
Housing prices in Seoul spiked over 19% in June on an annualized basis, according to Goldman Sachs, prompting financial authorities to step in with measures to address rapidly expanding household loans.
The Bank of Korea noted a “significant acceleration in housing prices in Seoul and its surrounding areas, [as well as] household debt.”
The central bank had lowered rates in its last policy meeting in May at a time when the country was in the midst of a political turmoil while also facing steep tariffs on auto and steel exports from the U.S.
While South Korea’s economy contracted by 0.2% quarter on quarter in the first three months of this year amid softening exports growth and weak construction activity, the bank chose to keep rates steady, prioritizing financial stability over growth concerns.
