On Friday, the Bank of Korea, led by Governor Rhee Chang-yong, announced a 0.25 percentage point reduction in the base interest rate, marking the start of a new easing phase. The rate was lowered from 3.5 percent to 3.25 percent, the first cut in 38 months since the bank began raising rates in August 2021 to combat inflation. This decision aligns with the recent half-point rate cut by the US Federal Reserve, which was the first reduction in over four years. The easing of inflation pressures facilitated this rate cut, as South Korea's consumer price index rose by only 1.6 percent year-on-year in September, dipping below the Bank of Korea's 2 percent target for the first time in over three years. However, the central bank faces challenges from rising household debt, which reached approximately 730.96 trillion won ($541 billion) by the end of September. Following the rate cut, the interest rate gap between South Korea and the US widened to 1.75 percentage points, surpassing the previous high of 1.5 percentage points.