Bank of Korea Deposit-Lending Rate Gap Widens Despite Benchmark Cuts

Central banks around the world are navigating complex interest rate decisions amid varied economic conditions. The U.S. Federal Reserve is highly likely to implement a 25 basis point rate cut soon, with market pricing showing a 99% probability of this move, though some analysts warn the Fed risks falling behind the curve. Meanwhile, Australia’s Reserve Bank has faced controversy over its monthly CPI releases, which have influenced calls for both rate cuts and hikes. In South Korea, despite cuts to the benchmark interest rate, the gap between loan and deposit rates has widened to its highest level in over two years, reflecting banks’ cautious approach to lending amid government pressure to manage household debt. This divergence has led to public dissatisfaction as loan costs remain high while deposit rates fall, reducing the attractiveness of saving. Overall, these developments underscore the challenges central banks face in balancing inflation control, financial stability, and economic growth.