Most Bank of Korea board members said too early for policy pivot -minutes

By Thomson Reuters Mar 12, 2024 | 2:43 AM

SEOUL (Reuters) – Most Bank of Korea board members said it was too early for a pivot in monetary policy at their rate decision meeting on Feb. 22, minutes showed on Tuesday, as policymakers continued to prioritise stabilising prices.

One member said it was too soon to discuss a pivot as inflation expectations remained high at 3%, adding that “caution must be taken against a premature expectation for a pivot.”

It was preferable to respond to the negative impact of high interest rates by using micro measures, while household debt and housing prices were among factors to be considered for a pivot in policy, board members said.

Meanwhile, one member “assessed that the risk from the easing of tightening had been reduced somewhat, as inflationary pressures had weakened slightly due mainly to sluggish domestic demand,” according to the minutes.

Last month, South Korea’s central bank joined its peers in the United States and Australia in seeking to cool investors’ aggressive rate cut expectations, after keeping interest rates at a 15-year high. At the meeting, one of the seven members said the door for a rate cut should remain open over the next three months.

(Reporting by Jihoon Lee; Editing by Ed Davies)