The Bank of Korea recently froze its benchmark interest rate, but concerns over prolonged high rates persist. In particular, the real estate market has seen a sharp decline in transaction volume, and the risk of jeonse (long-term rental deposit) fraud is growing.
Consumer sentiment is also weakening, with middle-income households—already burdened by debt—starting to cut back on spending. While manufacturing exports are recovering, driven mainly by semiconductors, domestic demand remains sluggish.
This is a critical moment for government policy response. Lowering rates could reignite inflation, while keeping them high could deepen the economic slowdown—a difficult choice indeed.