Lee Chang-yong, governor of the Bank of Korea, said today (12th) that, in relation to the 'big step' (a 0.50 percentage point increase in the base interest rate) again for the first time in three months since July, "there is a high possibility that the price of real estate will fall further." It is true that many people are suffering, but I think there is also a part that contributes to stability from a macro (economic) perspective."



At a press conference held today after the Monetary Policy Direction meeting of the Bank of Korea Monetary Policy Committee (Monetary Policy Committee) today, Governor Lee answered as follows when asked about the impact of a 0.5% point increase in the base rate on the real estate market.



“There are several indicators, but we understand that the actual transaction price from January to August of this year fell by about 3 to 4 percent,” he said.



“It is true that many people who are in debt are suffering,” Lee said, but he pointed out that “one of the major causes of financial instability has been the increase in real estate prices and household debt over the past two to three years.”



He also explained, "I feel sorry for the painful aspects of adjusting real estate prices and household debt growth through this interest rate increase, but I think it also contributes to stability from a macro (economic) perspective."



However, he emphasized that it is more important to catch this when the inflation rate continues to exceed 5%.



“Even if income is added by 1 to 2 percent, real income will decrease when the inflation rate reaches 4 to 5 percent,” Lee said. I think it is,” he said.



Governor Lee analyzed that this 'big step' will reduce the Korean economy's growth rate by 0.1 percentage point, while increasing the interest burden of households and businesses by 12.2 trillion won.



However, it is estimated that the 250bp (2.50% point, 1bp = 0.01% point) increase in the base rate since August last year will have the effect of lowering the inflation rate by more than 1 percentage point.



Governor Lee said that the sharp rise in the won/dollar exchange rate since September is one of the main factors of this 'big step'.



"The sharp devaluation of the won brings two (two) changes," he said. "Of course, it affects the inflation rate by raising the price of imports. (This increases the risk of delaying the rate of decline in the rate of inflation to a large extent, so we respond." explained.



He also pointed out that the devaluation of the won itself has an impact on financial stability through several channels.



Governor Lee advised that foreign investment should be cautious as domestic interest rates are rising and the won/dollar exchange rate is at a high level.



He said, "Investing without thinking about when the exchange rate is normalized is highly likely to become a cliché."



As in the past, when you invest in (domestic) assets, it is different from when you earn 1~2% profit, so it is time to think about overseas investment.”



Lee pointed out. He

made it clear that



he would maintain the upward trend for the time being. "According to the current forecast, the inflation rate will continue to exceed 5% until the first quarter of next year." “I will take the stance of raising interest rates at any cost,” he said.



However, regarding whether to carry out a 'big step' or a 'baby step' (only a 0.25%p increase) at the MPC meeting in November, he said, "At this time, the Monetary Policy Committee decided on 50bp after much discussion between 25bp and 50bp." "The policy of raising the price of the won will continue, but the extent of the increase (November) will be decided by looking at the impact of various factors on the market," he said.



In particular, he emphasized that the global economic situation will change depending on the stance taken at the US Federal Open Market Committee (FOMC) scheduled for next month, so we must keep an eye on it.



Regarding the market expectation that the base rate will peak at around 3.5% in the future interest rate cycle, he said, "Many of the Monetary Policy Committee members do not see much difference." said.



However, "3.



(Photo = Yonhap News)