Seoul: Banks' loan rates fell for the sixth straight month in May, data showed Monday, as the central bank has been in a monetary easing cycle. The average lending rate of banks applied to new loans came to 4.17 percent last month, down 0.2 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).

According to Yonhap News Agency, the rate has been on a constant decline since December. The rate that banks pay for deposits also fell 0.08 percentage point to 2.63 percent, marking the eighth consecutive monthly decline. This continuous reduction in rates reflects the central bank's ongoing efforts to stimulate the economy.

The spread on banks' lending and deposit rates, accordingly, increased to 1.54 percentage points in May from the previous month's 1.48 percentage points, the data showed. This widening spread is indicative of the banks' adjusted financial strategies amid the current economic climate.

The BOK began its monetary easing cycle in October, marking its first policy shift since August 2021. It has cut its benchmark interest rate four times by a total of 1 percentage point through May in an effort to prop up economic growth amid sluggish domestic demand. The BOK is scheduled to hold its next rate-setting meeting on July 10, where further adjustments may be considered based on the prevailing economic conditions.