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DP official accuses BOK chief of rattling markets with rate cut comments

Published: 16 Nov. 2025, 15:59 Updated: 16 Nov. 2025, 16:46

Bank of Korea Gov. Rhee Chang-yong, left, and Democratic Party supreme council member Lee Un-ju [NEWS1]

A senior Democratic Party (DP) official slammed Bank of Korea Gov. Rhee Chang-yong for remarks she claims rattled Korea’s financial markets and caused sharp market swings over the weekend.

Lee Un-ju, a DP supreme council member, criticized Rhee in a Facebook post on Sunday, saying that “a single careless remark caused turmoil in the domestic bond, stock and foreign exchange markets over the weekend,” and added that he should step down if he plans to continue making such remarks.

“At this moment, given the negative output gap still, our official position is that we will maintain the, you know, easing monetary cycle,” Rhee said in a Bloomberg TV interview on Wednesday. “But the magnitude and timing of the cut or even the change of direction will depend on the new data that we will see.”

The comment drew criticism from Lee for causing confusion among foreign investors.

“His remark to foreign investors that there could be a change of policy direction depending on new data would have sounded like a shift back toward a rate hike stance based on indicators such as housing prices,” said Lee.

“His comments sent the bond market into turmoil,” she continued. “At a time when there were already expectations of increased Treasury supply due to investments in the United States, government bond prices plunged. Foreign investors sold off Korean Treasurys, the won-dollar rate surged and stock prices tumbled.”

Following Rhee’s remarks that the scale, timing and possible shift in the rate cut policy depend on new data, yields on all Korean government bonds except the one-year note hit their highest levels of the year in the Seoul bond market.

Bank of Korea Gov. Rhee Chang-yong is seen during a press conference at the central bank's headquarters in Jung District, central Seoul, on Oct. 23. [NEWS1]

Markets interpreted Rhee’s comments as signaling the possibility of a rate hike, increasing the incentive to sell Treasurys and pushing yields sharply higher.

Although the Bank of Korea later clarified that Rhee’s comments did not indicate a rate increase, the prevailing view in the market is that the rate cut cycle has effectively ended.

“I have never seen a central bank governor speak so bluntly about interest rates, either in Korea or abroad,” said Lee. “Saying not only that rate cuts could stop but that the stance could shift to rate hikes goes far beyond what a Bank of Korea governor should say.”

“On top of that, he even expressed willingness to intervene in the foreign exchange market," she said. "For a central bank governor to say something like that, not the finance minister, was crossing the line.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY CHO MUN-GYU [[email protected]]