The head of the country's financial regulator has assessed that the central bank's recent move to freeze its key rate has created room for banks to lower their loan interest rates.

Appearing on a KBS program on Sunday, Financial Services Commission (FSC) Chairman Kim Joo-hyeon presented the assessment in relation to the Bank of Korea's Thursday decision to freeze the key rate at three-point-five percent.

The FSC chief said that the move will stabilize the Cost of Funds Index, a benchmark lending rate for mortgage loans, giving room for banks to freeze or lower their loan rates.

Regarding the rate freeze, Kim said that the central bank must have made the decision after comprehensively examining various factors, adding that it takes time before the adjustment of key rates take effect.

Kim speculated that rising concerns about economic growth affected the BOK's decision on the key rate, noting the central bank lowered its forecast for this year from one-point-seven percent to one-point-six percent.