Latest news with #householdDebt
Reuters
10-07-2025
- Business
- Reuters
South Korea holds rates steady amid tariff, household debt concerns
SEOUL, July 10 (Reuters) - South Korea's central bank held interest rates steady on Thursday, as policymakers steered a cautious path amid concerns about financial stability risks stemming from rising household debt and economic pressure from U.S. tariffs. The Bank of Korea's seven-member monetary policy board voted to keep its benchmark interest rate (KROCRT=ECI), opens new tab unchanged at 2.50%, an outcome expected by all 33 economists in a Reuters poll. Concerns of financial stability risks in Asia's fourth-largest economy have grown in recent months, driven by home prices and household debt rising sharply on lower interest rates, prompting policymakers to introduce stricter mortgage rules. Economists expect the central bank, which has lowered interest rates by a cumulative 100 basis points in the current easing cycle that started in October, to deliver at least one more rate cut of 25 basis points this year to underpin the economic recovery. The government last week adopted a second supplementary budget for the year with a cash handout scheme to boost domestic demand, as President Lee Jae Myung, who took office on June 4, prioritises shoring up an economy grappling with trade risks and tepid consumption. Earlier this week, U.S. President Donald Trump ramped up the trade war he launched this year, telling partners, from powerhouse exporters such as Japan and South Korea to minor players, that they will face high tariffs from August 1. Governor Rhee Chang-yong will hold a press conference at 0210 GMT, which will be livestreamed via YouTube.
Reuters
08-07-2025
- Business
- Reuters
Bank of Korea to pause easing in July amid household debt surge: Reuters poll
BENGALURU, July 8 (Reuters) - The Bank of Korea will pause its easing cycle on Thursday but is expected to resume interest rate cuts next month to support economic growth in a country burdened by high household debt, a Reuters poll of economists suggested. Government data showed, opens new tab home-backed mortgage loans rose by 5.6 trillion won ($4.1 billion) in May, accelerating from a 4.8 trillion won increase in April. That uptick is likely to deter the central bank from delivering back-to-back rate cuts even as it remains on an overall easing path. "There is a need to be cautious about the possibility of housing market and household debt-related risks increasing again," central bank board monetary policy board member Kim Jong-hwa said on June 25. All 33 economists polled July 1–7 expected the BOK to hold its base rate (KROCRT=ECI), opens new tab at 2.50% on July 10. "A pause in July is not really a special thing. Financial stability and housing market concerns were always under consideration when the BOK was conducting monetary policy," Stephen Lee, chief economist at Meritz Securities, said. "The only thing ... that seems a little bit different this time is that home prices in Seoul have recently surged and that has caused mortgage loans to rise," he added. Even after 100 basis points of cuts since late last year, the minutes of the May meeting showed board members saying it was necessary to continue easing monetary policy to support economic growth. With the economy contracting 0.2% in the first three months of the year and inflation largely stable at around 2%, a significant majority of economists - 22 of 31 - expect the BOK to lower the policy rate by 25 basis points to 2.25% by the end of this quarter. However, views diverged on where rates will end the year. Just over half of economists, or 16 of 31, saw the policy rate at 2.25%, while 13 said rates would fall to 2.00% by end-2025. Two expected it to remain unchanged at 2.50%. "The combination of lackluster growth and contained price pressure will encourage further policy support," Jennifer Kusuma, senior rate strategist at ANZ, said. "We expect the BOK's policy messaging to keep the door open for further easing and continue to see scope for a further 25 bps rate cut this year, taking the policy rate to 2.25%." A slowing economy and the lack of progress on a trade deal with the United States are likely to weigh on the outlook. The poll showed economists reduced their 2025 growth forecast to 0.9% from 1.3% expected in April, aligning with the central bank's projection of 0.8%. Inflation was expected to average 2.0% this year and ease slightly to 1.9% in 2026. "The prolonged uncertainty will surely dampen the already weak domestic demand growth, companies will likely adopt wait-and-see mode before finalising their investment plans," Kelvin Lam, senior economist at Pantheon Macroeconomics, said. "If trade talks with the U.S. turn sour, then there will be a higher chance of rates going to 2.00% by end of this year." (Other stories from the July Reuters global economic poll) ($1 = 1,367.7 won)
CNA
08-07-2025
- Business
- CNA
Bank of Korea to pause easing in July amid household debt surge: Reuters poll
BENGALURU :The Bank of Korea will pause its easing cycle on Thursday but is expected to resume interest rate cuts next month to support economic growth in a country burdened by high household debt, a Reuters poll of economists suggested. Government data showed home-backed mortgage loans rose by 5.6 trillion won ($4.1 billion) in May, accelerating from a 4.8 trillion won increase in April. That uptick is likely to deter the central bank from delivering back-to-back rate cuts even as it remains on an overall easing path. "There is a need to be cautious about the possibility of housing market and household debt-related risks increasing again," central bank board monetary policy board member Kim Jong-hwa said on June 25. All 33 economists polled July 1–7 expected the BOK to hold its base rate at 2.50 per cent on July 10. "A pause in July is not really a special thing. Financial stability and housing market concerns were always under consideration when the BOK was conducting monetary policy," Stephen Lee, chief economist at Meritz Securities, said. "The only thing ... that seems a little bit different this time is that home prices in Seoul have recently surged and that has caused mortgage loans to rise," he added. Even after 100 basis points of cuts since late last year, the minutes of the May meeting showed board members saying it was necessary to continue easing monetary policy to support economic growth. With the economy contracting 0.2 per cent in the first three months of the year and inflation largely stable at around 2 per cent, a significant majority of economists - 22 of 31 - expect the BOK to lower the policy rate by 25 basis points to 2.25 per cent by the end of this quarter. However, views diverged on where rates will end the year. Just over half of economists, or 16 of 31, saw the policy rate at 2.25 per cent, while 13 said rates would fall to 2.00 per cent by end-2025. Two expected it to remain unchanged at 2.50 per cent. "The combination of lackluster growth and contained price pressure will encourage further policy support," Jennifer Kusuma, senior rate strategist at ANZ, said. "We expect the BOK's policy messaging to keep the door open for further easing and continue to see scope for a further 25 bps rate cut this year, taking the policy rate to 2.25 per cent." A slowing economy and the lack of progress on a trade deal with the United States are likely to weigh on the outlook. The poll showed economists reduced their 2025 growth forecast to 0.9 per cent from 1.3 per cent expected in April, aligning with the central bank's projection of 0.8 per cent. Inflation was expected to average 2.0 per cent this year and ease slightly to 1.9 per cent in 2026. "The prolonged uncertainty will surely dampen the already weak domestic demand growth, companies will likely adopt wait-and-see mode before finalising their investment plans," Kelvin Lam, senior economist at Pantheon Macroeconomics, said. "If trade talks with the U.S. turn sour, then there will be a higher chance of rates going to 2.00 per cent by end of this year."
Daily Mail
06-07-2025
- Business
- Daily Mail
Employee benefit linked to financial stress takes aim at traditional 401(K)s as US debt skyrockets
Americans are increasingly turning to services that are setting off alarm bells. Instead of waiting for a traditional payday, workers are increasingly using apps like DailyPay, FlexWage, and Tapcheck to get paid the same day they work — sometimes just hours after clocking out. It's called on-demand pay, and it's growing fast as millions of households face financial stress. The service lets users withdraw wages they've already earned before their scheduled payday. 'It helps a lot of employees, especially ones in school who need to pay a bill while check isn't scheduled for another week,' one Reddit user said about DailyPay. 'But don't make it a habit — when you get paid in full, your check is little.' These apps are marketed as an alternative to payday loans. There's no interest, but workers typically pay a flat fee of $2 to $5 for instant access. Next-day deposits are often free. The rise of on-demand pay comes as Americans face mounting financial pressure from nearly every direction. Total household debt surged by $167 billion in the first quarter of 2025, reaching a record $18.2 trillion, according to the Federal Reserve Bank of New York. Around $5 trillion of that debt is non-housing, consumer debt. While credit card balances dipped slightly — falling $29 billion from the previous quarter — student loan debt jumped by $16 billion. Delinquencies spiked after the end of a multi-year pause on repayment reporting. Overall, 4.3 percent of household debt is now delinquent in some way. That situation is especially dire for Americans living paycheck to paycheck. Roughly one in three consumers struggle to manage their debt, and 35 percent say they can't pay all their bills on time, according to new survey data from digital finance firm Achieve. America's labor market has shown surprising resilience - analysts were recently surprised with how many US employees got jobs last month 'When people are overwhelmed and about to miss bill payments, they often don't know what steps to take,' Brad Stroh, the firm's CEO said about the survey's findings. The agency suggested consumers should avoid quick fixes to their debt problems like cash advances, saying they 'can deepen long-term financial challenges.' 'One significant concern with on-demand pay is the potential for high associated costs,' Austin Kilgore, an analyst at the Achieve Center for Consumer Insights, told 'The real danger emerges when individuals fall into a cycle of repeatedly accessing their wages early rather than managing their existing funds. 'This can lead to a situation where a significant portion of their income is consumed by fees, essentially preventing them from having full access to their earned money.' But the problem doesn't seem to stem from American employment opportunities. Early Thursday, the Labor Department released it's June jobs report that showed shocking resilience in the jobs market. Last month, America added 147,000 jobs, up from 139,000 added in May. Hidden in today's numbers was good news for debt-burdened Americans: the average wage is still increasing. Last month, employers typically paid $36.30 an hour for work, an $0.08 hourly increase from the month before. The positive numbers were shocking to many analysts, especially given the news on Wednesday.
Bloomberg
30-06-2025
- Business
- Bloomberg
Thai Household Debt Drops to Five-Year Low as New Loans Shrink
Thailand's household debt level fell to the lowest since early 2020 after lenders tightened new loan approvals and government unveiled measures to provide relief to millions of borrowers. The debt level as a ratio of gross domestic product stood at 87.4% in the first quarter, down from 88.4% at the end of last year, according to data published by the Bank of Thailand on Monday. An economic expansion of 3.1% in the January-March quarter also helped cut the debt as a percentage of GDP, according to BOT Senior Director Pranee Sutthasri.
