S.Korea's top central banker signals need for tightened monetary policy

BY  | FROM  | 2017-06-12 16:11

South Korea's top central banker on Monday signaled the need to tighten monetary policy as the country's policy rate stayed at a record-low level for a year.

Bank of Korea (BOK) Governor Lee Ju-yeol said in the 67th anniversary of the bank's founding that he would mull a possibility for adjusting the current accommodative monetary policy when the trend of economic recovery gets clearer.

It marked the first time that Lee mentioned the possibility for the tightened monetary policy.

The BOK cut its benchmark interest rate from 3.25 percent in July 2012 to an all-time low of 1.25 percent in June last year.

The record-low policy rate accelerated the already massive household debts together with the eased regulations on mortgage financing.

Lee, however, noted that though the recovery trend was strengthened recently, uncertainty remained strong about the growth path and that demand-side inflationary pressures were not that high.

His comments indicated the tightening of the monetary policy would not be rapid.

Exports, which account for about half of the economy, posted a double-digit growth in recent months, but private consumption was still lackluster as massive household debts and a widening income gap discouraged consumers from spending money.

The government allocated about 10 billion U.S. dollars to a supplementary budget for the second half as part of efforts to create more jobs and boost the private consumption.

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