At the end of last week, South Korea’s government‑bond market displayed a fluctuation beyond its normal range; in particular, the 30‑year government bond yield reached an all‑time high of 19%. This phenomenon arose as the central bank reduced its price‑adjustment role and private investors’ participation expanded.
Rising interest rates increase fiscal burden and may lead to an economic slowdown. Therefore, urgent policy response is needed to prevent a negative spiral. The government has urged strengthening of fiscal tools such as continuous reserve requirement and other fiscal instruments.
The central bank must promptly devise measures to address the interest‑rate volatility and safeguard market price stability. Investors require risk management and transparent information disclosure. When these measures are implemented, South Korea’s bond market and fiscal economy will both head toward a healthier direction.