Defying market expectations, the MPC resolved to cut the policy rate by 0.25% to 2.25%; another rate cut is likely at the next meeting if the MPC is still concerned about debt (Business Brief No.4090 Full Ed.)

• Contrary to market expectations, the MPC voted 5 to 2 to cut the policy rate by 0.25 percent, to 2.25 percent at its meeting on October 16, 2024. This rate cut is expected to help ease the debt burden somewhat amid deteriorating asset quality, especially among SMEs and households, as their income has not fully recovered yet while also having to shoulder hefty debt. Additionally, the move reflects the MPC’s increased focus on risks to financial stability.
• The MPC also stated that the lower policy rate remains neutral and is in line with the economy's potential.
• KResearch is of the view that there remains a high degree of uncertainty regarding the policy rate at the next MPC meeting slated for December 2024, as it primarily depends on future events