According to Jinshi Data, South Korea's CPI rose 2% year-on-year in August, down from 2.6% in July. Currently, four of the seven central bank members are open to cutting interest rates before the end of the year. Although Governor Lee Chang-yong did not reveal his views, many economists expect the Bank of Korea to start cutting interest rates at its October meeting.
Policymakers are now increasingly concerned about housing prices in Seoul, where rapid increases have raised concerns that households will take on more debt and financial imbalances will emerge. Government officials have taken steps to curb housing prices, with purchases of Seoul apartments falling for the first time in months in August and sales prices continuing to slide.
Meanwhile, weak private spending and credit risks in the construction sector have given the Bank of Korea more reason to consider a rate cut next month. The growing likelihood that the Federal Reserve will initiate a policy shift this month also supports the view that the Bank of Korea may follow suit at its next meeting.