Board members are keeping its policy interest rate unchanged at 3.50%, the highest since late 2008
The Bank of Korea’s monetary policy board members were cautious about lowering interest rates at its meeting on Aug 22, as they were concerned about rising risks to financial stability despite slowing inflation, minutes showed on Tuesday (Sep 10).
“Given stable inflation, the slow recovery of domestic demand, and high delinquency rates among some vulnerable sectors, it seems to be the right time for gradual monetary easing,” one board member said.
The member, however, added: “Rate cuts should not act as a catalyst to accelerate the rise in real estate prices.”
Other members also noted that it was desirable to examine the effects of recent government measures to curb the rise in house prices as the board determines the timing of rate cuts, and necessary to manage market expectations to prevent financial stability risks from increasing.
One member even argued that it was necessary to operate the policy rate path on a higher trajectory than it would be if only inflation and growth were considered.
Last month, the board members decided unanimously to keep its policy interest rate unchanged at 3.50 per cent, the highest since late 2008, amid expectations for an imminent policy easing. REUTERS
