Some monetary policymakers voice need to ‘be careful’ for more rate hikes: minutes

SEOUL– Top central bank policymakers underlined the importance of continuing to combat inflation when they voted to raise the benchmark interest rate last month, but some raised the need to “be careful” in determining additional hikes, minutes of their recent meeting showed Tuesday.

The seven-member monetary policy board of the Bank of Korea (BOK) held this year’s last rate-setting meeting on Nov. 24 and unanimously voted to lift the seven-day repo rate from 3 percent to 3.25 percent.

It marked the sixth straight interest hike and the ninth increase of a combined 2.75 percentage points since August last year. It also followed October’s second-ever “big-step” 0.5 percentage-point increase.

Most board meetings voiced the need to put emphasis on fighting inflation, but some cautioned against steep rate hikes going forward, as they have to see the impact of previous increases in borrowing costs on the economy.

“As there have been 15 months since rates began to rise, the impact is emerging in earnest, centering on the real estate and financial markets,” an unnamed board member was quoted as saying in the minutes.

“The phenomenon of a one-sided movement to safe assets, such as time deposits, is materializing, with the corporate bond and short-term money markets facing instability,” the member said.

The monetary policymaker raised the need to be careful in pushing for additional rate increases, as the income and purchasing power of consumers have been weakened and it is also necessary to keep an eye on whether the financial market regains stability.

Another unnamed member said combating inflation should remain the top priority but called for the need to slow the pace of rate increases if core inflation, excluding volatile energy and food items, falls to the 2 percent range in late 2023 as predicted.

“In consideration of economic trends at home and abroad, we could slow the breadth and speed of rate increases,” the member said.

Source: Yonhap News Agency

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