South Korea’s Lee Jae Myung Signals Inevitable Rate Hike Amid U.S. Yield Gap and Global Tightening
President Lee Jae Myung declares South Korea cannot avoid raising its benchmark interest rate to narrow the U.S. yield gap and align with global monetary tig...
POLICY WIRE — Seoul, South Korea — President Lee Jae Myung stated during a cabinet meeting on Tuesday that South Korea has no choice but to raise its benchmark interest rate in the near term, citing mounting pressure from a widening yield differential with the United States and broader global monetary tightening.
The president emphasized that the rate increase is nearly unavoidable, directly referencing forecasts suggesting the Bank of Korea’s benchmark rate could reach 3.5% in the first quarter of next year—a projection already rattling domestic bond markets.
Lee also proposed acquiring delinquent loans at 5% of their principal value as part of a broader strategy to stabilize financial conditions amid tightening policy. His remarks represent a rare public intervention into monetary policy, a domain constitutionally reserved for the independent Bank of Korea.
Reporting by Policy-Wire (PW)
