Korea's top central banker brushes aside hopes of easy monetary policyUpdated: 2014-05-09 22:48:16 (KST)
Despite government concerns that the pace of economic recovery is not strong enough, Korea's top central banker has made it clear that any future monetary decision would include a rate hike.
While adding that it won't happen immediately, the Bank of Korea Governor Lee Ju-yeol said, after a monthly monetary policy meeting on Friday, that policymakers decided to keep the rate steady at 2-and-a-half percent this month.
"We believe the current 2-and-a-half percent key rate is accommodative enough to back the economic recovery and as far as I know the market also shares the same view with us."
"On slowing consumer spending due to the Sewol-ho ferry disaster, the Bank of Korea governor says it's still too early to act, but adds that the bank is closely monitoring its impact on the domestic economy."
Still, Lee maintained the bank's earlier growth forecast of 4 percent for this year, which matches up with the nation's potential growth rate.
The governor went on to say that the impact local exporters are feeling from a strong local currency, which currently hovers at its highest level in nearly six years, is different from the past.
Analyst Michael Na at Nomura in Korea also says that Korean companies have managed to improve their competitive edge, like Samsung Electronics producing top-of-the line gadgets.
"Because back in the old days, Korean companies competed on price but alot of the products that we sell these days aren't really price sensitive, as it was before."
Fighting dangers of inflation exceeding the mid two percent range in the second half of this year, the top central banker said any changes to interest rates in the coming months would likely be an upward adjustment.
Hwang Ji-hye, Arirang News.
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