Household Debt Impacts Monetary Policy

This is a South Korea news story, published by CNBC, that relates primarily to Rhee Chang Yong news.

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higher household debt

CNBC

•

Business

Business & Economics

South Korea has a big household debt problem. The country's unique rental system may be to blame

Summary

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88% Informative

South Korea has exceptionally high household debt in the country, which experts say could cripple growth if left unchecked.

The BOK is concerned about the negative long-term impact of higher household debt on growth.

BOK Governor Rhee Chang Yong said in a speech on Jan. 2 that "there has been some criticism" regarding why the Bank of Korea takes household debt into account.

"If you lower interest rates and debt increases and this is used to stimulate housing demand, which causes house prices and rental prices to rise, then it is inflationary and BOK would want to limit the inflationary impact," Rhee said. Alex Holmes , research director for Asia at the Economist Intelligence Unit told CNBC 's " Squawk Box Asia " earlier in January that 2024 was the first year that household debt had come down as a percentage of GDP, and the BOK will not want to cut rates too quickly to prevent a rebound..