Seoul: Banks' lending rates have decreased for the fifth consecutive month in April, as data revealed on Tuesday, a trend attributed to the central bank's ongoing monetary easing cycle.
According to Yonhap News Agency, the average lending rate for new bank loans dropped to 4.19 percent in April, a decline of 0.17 percentage point from the previous month, as reported by the Bank of Korea (BOK). This marks a consistent downward trend in lending rates since December 2024.
Breaking down the data, the average lending rate for corporate loans decreased by 0.18 percentage point to 4.14 percent, while the rate for household loans fell by 0.15 percentage point to 4.36 percent. In addition, the rate that banks pay for deposits declined by 0.13 percentage point to 2.71 percent, marking the seventh consecutive month of decline.
The narrowing of the spread between banks' lending and deposit rates to 1.48 percentage points in April, down from 1.52 percentage points the previous month, underscores the ongoing impact of the BOK's policy.
The BOK initiated its monetary easing cycle in October 2024, which was the first policy change since August 2021. Since then, the central bank has reduced its benchmark interest rate three times, totaling a reduction of 0.75 percentage point by February. Despite the ongoing easing, the central bank opted to maintain the rate at its recent monetary policy meeting, citing uncertainties related to the Donald Trump administration's tariff policies. The BOK is expected to conduct its next rate-setting meeting on Thursday.