High Interest Rates See Lending to Households Decline

Outstanding bank loans to households dropped for the first time in 18 years last year amid rising interest rates.

It is the first on-year decline since 2004, when related data were first compiled.

The Bank of Korea said on Thursday household loans stood at around W1.06 quadrillion last December, down by W2.6 trillion from a year earlier (US$1=W1,246). The decline is largely attributed to soaring interest rates amid the BOK's aggressive moves to curb runaway inflation.

On Friday, the BOK's Monetary Policy Committee raised its base interest rate by another quarter percentage point to 3.50 percent in its first meeting of this year. In an unprecedented run, the BOK has raised the rate seven times in a row since April last year.