Bank of Korea Board Divided as August Rate Hike Odds Rise

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an AI-based personalized news recommendation and summarization service developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Will Rates Rise Again After the Holidays? It Depends on Two Dovish Board Members

- Key Summary: Disagreement has been detected within the Monetary Policy Board over whether to deliver a back-to-back rate hike (two consecutive hikes) in August. According to the minutes of the July monetary policy meeting released by the Bank of Korea on the 5th, four of the six board members explicitly cited the need for a further hike, pointing to corporate investment and improving household income. In contrast, two members kept their positions open, saying they wanted to monitor real economy and price indicators further or emphasizing the role of fiscal policy. Subsequently, second-quarter real gross domestic income (GDI) rose 15.6% from a year earlier, and July core inflation recorded 2.6%, the highest in 31 months, heightening tension surrounding the August meeting.

2. Musk: Demand Surges 200% While Production Rises 20%…Memory Prices Will Climb

- Key Summary: Elon Musk, CEO of SpaceX, refuted the market's memory chip peak-out theory, saying that while memory chip production grows 20% each year, demand surges more than 200%. On the same day, U.S. chipmaker AMD also posted strong results, with data center revenue of $6.72 billion, more than double the figure from a year earlier. SpaceX, posting its first earnings after listing, also reported revenue of $7.8 billion, a 92% surge from a year earlier. However, its shares plunged more than 7% in after-hours trading as attention focused on AI-related capital expenditures of $18.4 billion, a sixfold surge from a year earlier. As a result, both AI chip demand and the burden of large-scale investment are drawing market attention simultaneously.

3. Korea to Remain Memory Chip Powerhouse Through 2031

- Key Summary: A forecast has emerged that Korea will maintain its position as the world's strongest player in the global memory chip market through 2031. At the memory and storage exhibition 'FMS 2026' held in California on the 4th, a Yole Group analyst noted that the Korean government is pushing a plan to double wafer production within five years. Amid the U.S.-China semiconductor supremacy competition, the U.S. share of memory chip consumption rose from 37% in 2021 to 52% last year, while over the same period China's share fell from 35% to 29%. Meanwhile, in the high-bandwidth memory (HBM) market, a forecast has also emerged that Nvidia's share will fall from 66% last year to around 58% this year, due to Big Tech's expanded adoption of custom application-specific integrated circuits (ASICs).

4. Pension Savings Accounts: Fund Share Tops 40% for First Time

- Key Summary: The share of pension savings funds within personal savings accounts (PSA) exceeded 40% for the first time at the end of the second quarter this year. According to the Financial Supervisory Service's integrated pension portal, total PSA reserves at the end of the second quarter stood at 212.2412 trillion won, up 14.6% from the end of last year. Of this, pension savings fund reserves amounted to 90.0242 trillion won, up 26.9% from the first quarter. In contrast, pension savings insurance and pension savings trust reserves fell 1.8% and 8.2%, respectively. The change was analyzed as being driven by increased stock investment through personal pensions and retirement pensions, centered on people in their 40s and 50s, buoyed by the rise in domestic stock markets.

5. Big Tech's Hidden Debt Nears $100 Billion

- Key Summary: The portion of long-term data center lease agreements by the five largest U.S. Big Tech companies—Alphabet, Microsoft (MS), Amazon, Meta, and Oracle—that has not yet been recognized as debt on their books amounts to approximately $1.09 trillion (about 1,560 trillion won). According to Reuters, this is about four times the $285 billion already recognized as lease debt. By company, Oracle's undisclosed leases stood at $260 billion, about seven times its current lease debt ($37.89 billion), making its financial burden the largest. As Big Tech companies continue large-scale investments to respond to surging artificial intelligence (AI) demand, some point out that potential financial risks could grow if demand falls short of expectations.

6. Korea Housing Finance Corp. Raises PF Guarantee Cap to 8 Trillion Won…Also Weighs Easing 1.5% Loan Volume Cap

- Key Summary: Financial authorities are reviewing a plan to expand the public guarantee cap of the Korea Housing Finance Corporation related to real estate project financing (PF) to more than 8 trillion won this year. The Financial Services Commission (FSC) is considering raising the guarantee cap from the previous 6 trillion won to support expanded housing supply, while also weighing an easing of the household loan volume cap to provide group loans. However, the focus is leaning toward easing in the housing supply area while tightening jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) loan regulations. A plan to lower the public guarantee cap for jeonse loans in the greater Seoul area from the previous 80% to 70% or below is being discussed. The FSC plans to report these real estate management measures to President Lee Jae-myung on the 7th.