South Korea's financial vulnerability index (FVI) rose to 31.5 in the April-June quarter from 30.0 in the previous quarter, as reported in the Bank of Korea's (BOK) financial stability report. The rise in the FVI was driven by a surge in private sector credit, particularly in the housing market, with the ratio of private credit to GDP reaching 204.9 per cent at the end of June, up 0.5 percentage points from the previous quarter. Household credit increased slightly to 92.2 per cent, driven by a rise in mortgage loans that offset lower credit loans. Corporate credit also rose, reaching 112.7 per cent of nominal GDP. The recent interest rate cuts by the US Federal Reserve have increased pressure on the BOK to ease its monetary policy. However, the central bank has maintained its benchmark interest rate at 3.50 per cent since January 2023. Attribution: Xinhua Subediting: Y.Yasser
