Lee Chang-yong, Governor of the Bank of Korea, maintained a stern expression before the first Monetary Policy Committee of the Bank of Korea for the second quarter on 17th. The uncertainty of U.S. President Donald Trump's tariff policy makes it unclear where the exchange rate of the won against the U.S. dollar (won-dollar exchange rate) will turn, and with rising house prices in Seoul, it appears that domestic and international anxieties have increased.
On that day, the commissioners entered the conference room on the 16th floor of the Bank of Korea headquarters at 8:58 a.m., two minutes before the meeting started. Deputy Governor Yoo Sang-dae was the first to arrive, followed by commissioners Hwang Geon-il, Jang Yong-seong, Lee Soo-hyang, Shin Seong-hwan, and Kim Jong-hwa taking their seats in order. The commissioners maintained silence without engaging in any conversation from the moment they entered the conference room until they sat down.
The governor appeared in the conference room at exactly 9 a.m., wearing a blue tie, two minutes later. After looking around at the more than 20 reporters, the governor said, "Why are so many of you here today?" and tapped the gavel three times to signal the start of the meeting. As the governor shifted through the documents, he noted, "Let's check that later," and asked the reporters to leave the conference room.
This stands in stark contrast to the remarks he made at the previous Monetary Policy Committee meeting in February, where he said, "It seems like the weather has warmed up, and I hope everything goes well." On this day, the governor chose his words carefully, speaking only as necessary.
The current base interest rate is 2.75%, but the prevailing view in the market is that the Monetary Policy Committee will keep it unchanged. In a survey conducted by ChosunBiz prior to that day's meeting, all 10 domestic bond experts surveyed voted for 'interest rate freeze.'
The results from the Korea Financial Investment Association's survey conducted from the 4th to the 9th of this month with 100 bond experts were similar. In that survey, 88% expected the base interest rate to remain unchanged. This represents a 43 percentage points increase compared to the previous survey in February. The Korea Financial Investment Association explained, "Despite heightened downward pressure on the economy due to U.S. tariff policies, the uncertainty concerning exchange rate volatility and household debt has increased expectations of an interest rate freeze compared to the previous survey."
In reality, the won-dollar exchange rate, which influences the base interest rate, is in a troubling state. On the 9th, following the announcement by the United States that it would impose reciprocal tariffs on major countries running trade deficits, it soared to 1,484.1 won, the highest level since the financial crisis on March 12, 2009, when it reached 1,496.5 won.
After President Trump noted that he would exclude or delay reciprocal tariffs on certain items like smartphones and computers, the rate dropped to the 1,420 won range. However, given the unpredictable nature of the Trump administration, it remains uncertain.
Recently, the real estate market also shows signs of instability. With demand concentrating on the three districts of Gangnam (Gangnam, Seocho, Songpa), newly built properties, and transit-oriented developments, the comprehensive housing sales price index in Seoul increased by 0.52% compared to the previous month. This is the largest increase in six months since last September.
Meanwhile, excluding January of this year, the Monetary Policy Committee has been steadily lowering the base interest rate since October of last year. The rate was reduced from 3.50% in August of last year to 3.25% in October of the same year, and a month later in November, it was further lowered to 3.00%. After maintaining it at 3.00% in January this year, it was lowered to 2.75% in February.