SEOUL: South Korea’s financial system is stable and resilient against shocks but efforts to curb household debt need to continue as debts keep growing faster than income, the central bank said in a report.
The country’s household debt grew 6.7 percent by the end of September over a year earlier, beating a 4.0 percent gain in disposable income, the Bank of Korea said in its biannual financial stability report.
This brought the ratio of household debt against disposable income to 162.1 percent by the end of September, compared with 158.0 percent a year earlier, it said. The ratio also ticked up from 161.0 percent at the end of June.
The country’s overall financial system maintained its stability and soundness against shocks, it added.
Last month, the central bank raised its policy rate KROCRT=ECI by 25 basis points to 1.75 percent in its first tightening in a year and called for continued vigilance against the still high debt burden.
Still, analysts expect slowing economic growth and low inflation to persuade the central bank to refrain from further tightening its policy, at least throughout next year.