SEOUL, Oct 26 (Reuters) – Members of the Bank of korea (BOK) board expressed caution regarding future interest rate cuts, citing concerns about persistent inflation and the potential for a rebound in economic growth, minutes from their October 12 meeting revealed on Thursday.
While acknowledging a slowdown in economic activity,several board members emphasized the need too maintain a restrictive monetary policy stance until there is greater certainty that inflation is sustainably moving towards the central bank’s 2% target. The minutes indicated a prevailing view that premature easing could reignite price pressures, potentially requiring more aggressive tightening later.
The BOK has held its benchmark interest rate steady at 3.50% as January, following a series of aggressive hikes to combat soaring inflation. The latest data shows South Korea‘s consumer price index rose 3.7% in September, remaining above the BOK’s target.
Several board members noted that domestic demand remained relatively resilient, supported by a strong labor market and government spending.they also highlighted the possibility of a recovery in global trade, wich could further boost economic growth.
“There is a need to carefully assess the pace of inflation deceleration and the strength of economic activity before considering any policy adjustments,” one board member was quoted as saying in the minutes. Another member cautioned against being swayed by temporary fluctuations in inflation, stressing the importance of focusing on underlying trends.
The BOK’s next monetary policy meeting is scheduled for November 24. The minutes suggest that the board is likely to adopt a wait-and-see approach, closely monitoring economic data and global developments before making any decisions on interest rates. This cautious stance reflects the central bank’s commitment to price stability and its determination to avoid repeating past mistakes of prematurely loosening monetary policy.
