SEOUL: South Korea’s central bank kept interest rates unchanged for a fourth straight month on Tuesday, as widely expected, while observing the effects of global policy changes on its gradually recovering economy.
Following are key remarks from Bank of Korea Governor Lee Ju-yeol’s news conference, translated by Reuters:
“Today’s decision to hold rates was unanimous.”
“Countries around the world are changing their monetary policy based on their separate situations.
I don’t feel that we can change our monetary policy just based on the exchange rate changes that stem from their policy decisions.”
“Our monetary policy is currently at a level that is not limiting the real economy’s growth.”
“I can’t help but be cautious speaking on the effect of our rate cuts last year. External conditions have been uncertain while sentiment is sluggish. When also considering that structural problems are worse than before, I have to cautiously say that rate cuts have a more limited impact on the real economy compared to before.”
“The global economy is expected to continue a mild recovery going forward, centered on the U.S., but it stands a chance of being influenced by monetary policy changes in key countries, economic weakness emerging economies, geopolitical risks and uncertainties stemming from Greece.”
“It is not appropriate to call the monetary policy easing happening in other countries a ‘currency war.'”
“However, we are watching changes in other countries very closely, and especially the won’s level against the yen and the euro.”
“The recovery of domestic consumption ebbs and flows and is not stable.”
“The local economy is expected to show steady improvement in the coming months.”
“It has been just one month into the new year. I don’t think we can change our economic forecast based just on the flows from one month.”
“Downside risks that envelop our economic growth still persist, and while some uncertainties have subsided we need time to see how those risks will play out and in which direction.”
“Borrowing by households shrank last month, but when putting aside seasonal factors, household debt continued to increase in January.”
“It is difficult to say what direction the economy and inflation will take at this time.”