(Bloomberg) -- Aiding the recovery in private consumption takes priority over curbing household debt for now, South Korea’s Finance Minister Choi Sang-mok said, in comments that add pressure on the central bank to embark on a policy pivot next month.
“I think recovering consumption is at least a little more important in the short term,” Choi told a televised conference with local journalists Wednesday when asked to choose whether boosting spending or curbing loans should be the foremost policy priority.
Choi began his remarks with the caveat that he was speaking as a deputy prime minister overseeing the economy, and he added that he respects all decisions by the Bank of Korea, which next meets on Oct. 11.
Authorities have in recent months extended their holding pattern with the benchmark at a restrictive 3.5% in a bid to cool household debt as a faster-than-expected recovery in the housing market threatens to spur borrowing. Board members have expressed concerns that an early cut could further fuel appetite for mortgage loans and risk causing financial imbalances.
Choi said he hopes the BOK will make a “wise decision” when the board meets next month.
He declined to say whether the BOK might have missed the right timing to cut its rate, which has stayed at 3.5% since early 2023.
Choi is set to meet with BOK Governor Rhee Chang-yong on September 30, when the two will discuss “future economic structural issues,” according to a statement from the Finance Ministry. Discussions are “unrelated to pending issues such as interest rates, the property market and household debt,” it said.
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