2 monetary policymakers wanted time to gauge impact of tightening: minutes

SEOUL– Two top central bank policymakers expressed worries over the impact of previous rate hikes on the overall economy and wanted to stay put at this year’s first rate-setting meeting early this month, minutes of the gathering showed Tuesday.

On Jan. 13, the seven-member monetary policy board of the Bank of Korea (BOK) voted to raise the benchmark interest rate by 0.25 percentage point to 3.5 percent to bring inflation under control.

The rate marked the seventh straight rate increase since April last year, the longest span of tightening, and represented the highest level since late 2008.

Of the seven policymakers, two — Joo Sang-yeong and Shin Seong-hwan — voiced their dissent and wanted a rate freeze, BOK Gov. Rhee Chang-yong told reporters during a post-meeting press conference.

One of the two members saw the current interest level as “significantly tightening,” according to the minutes.

“Given that rate increases made so far are beginning to affect the real economy and the possibility is high that the economy slows more than expected for this year, I assess the current interest level as significantly tightening,” the unnamed board member said, while supporting a rate freeze.

“I determine that it is appropriate to decide on further tightening after looking into the extent of impact from previous tightening, path of the real economy and other external conditions,” he added.

Another unnamed member called for a rate freeze, expressing worries that economic vitality could be excessively undermined if the BOK delivers a further increase in borrowing costs.

“As the terminal interest rate will likely be here to stay for a significantly long period of time, it is necessary to stay cautious against the possibility of the economy getting excessively contracted,” he said.

He, in particular, pointed to worries over the slumping real estate market and continued decline in private credit that had led to a contraction in money supply.

Source: Yonhap News Agency

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