South Korea should maintain its efforts for financial stability amid high market rates, an Asian regional economic institute said Wednesday.
After an annual consultation with the finance ministry, the Bank of Korea and other agencies, the ASEAN+3 Macroeconomic Research Office (AMRO) said the South Korean authorities should consider additional measures to rein in household debts and stabilize the home market.
AMRO also said the current restrictive stance by the BOK needs to be maintained till inflation in Asia’s fourth-largest economy stabilizes, reaching the central bank’s target level of 2 percent.
Last month, the bank held its key interest rate steady at 3.5 percent for the seventh straight time amid a slowdown in growth and rising household debts.
The rate freeze comes after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
The agency also recommended the strengthening of fiscal soundness in line with an economic recovery next year.
The Singapore-based organization was established in 2011 to promote macroeconomic and financial stability in the Asian region, which involves the 10-member Association of Southeast Asian Nations (ASEAN) and its three Northeast Asian partners of South Korea, China and Japan.
AMRO extends support for the member nations to ensure that the Chiang Mai Initiative Multilateralization (CMIM) arrangement is operationally ready.
Launched in 2010, the CMIM is a multilateral currency swap arrangement among the ASEAN+3 nations, which aims to give liquidity to member nations in times of financial crisis. The pool amounts to US$240 billion, with South Korea contributing $38.4 billion.
Source: Yonhap News Agency