The Monetary Policy Board of the Bank of Korea holds a meeting in Seoul on Feb. 27, 2018. (Image: Yonhap)
SEOUL, March 20 (Korea Bizwire) – Members of South Korea’s central bank policy board agreed to freeze the key rate last month as inflation pressure remained low and economic growth was moderate, according to minutes from the monetary meeting released Tuesday.
The Bank of Korea’s (BOK) monetary policy board meeting on Feb. 27 held the base rate at 1.50 percent for the second time in a row since raising the rate for the first time in more than six years in November last year.
The BOK said the seven-member panel made the rate-freeze decisionunanimously.
According to the minutes from the February meeting, board members said it was not the right time to raise the key rate again, citing low inflation pressure.
South Korea posted a 1 percent rise in consumer prices in January, the lowest number in 17 months.
“As inflation pressure, which is the most important factor for monetary policy, has yet to be seen, it is desirable to freeze the rate at the current level,” an anonymous member was quoted as saying. “Also, the South Korean economy has been on the right upside track, as the BOK expected.”
Another official said the central bank should maintain the key rate until the economic recovery is strong enough to push up inflation.
Another board member said monetary tightening is needed in the mid-term as a years-long low-rate trend has caused imbalances in the South Korean financial market, such as massive household debt.
“Given many facts, it is necessary to raise the key rate in the medium term,” he said. “But the central bank has to adjust the monetary policy after checking the inflation track, the movement of the neutral rate, the financial imbalance and the effect of the ongoing restructuring.”
(Yonhap)
