Bank of Korea board members called for closer watch on market instability
3:58 am Tuesday, December 13th, 2022
SEOUL (Reuters) – Most of the Bank of Korea’s policy board members called for closer attention toward signs of stress in local financial markets while agreeing to a rate hike at their November meeting, minutes showed on Tuesday.
The Bank of Korea’s (BOK) monetary policy board unanimously raised its benchmark policy rate by 25 basis points to 3.25% at the Nov. 24 meeting, the highest since 2012, after delivering a half-percentage point hike in October.
One of the six members cited in the minutes called for a pause in the tightening cycle, which started in August last year, given growing instability in local markets and in order to evaluate the effect of past rate hikes aimed at curbing inflation.
“In the future, we need to check the effect from past monetary policy decisions and monitor how internal and external factors of uncertainty play out before deciding the speed of further policy tightening cautiously,” the member said.
The minutes do not identify speakers and do not include comments by Governor Rhee Chang-yong, who had already spoken at a news conference soon after the meeting.
Other members were divided over how much attention the Bank of Korea should continue to place on fighting inflation, but most of them agreed instability in financial markers deserved a closer watch after months of tightening.
“The effect of rate increases for the past 15 months is becoming more pronounced in real estate and financial markets, and corporate bond and short-term money markets show instability,” another member said.
About a week after the meeting, Rhee said during an interview at the Reuters NEXT conference that he hopes the policy rate would reach its peak at around 3.5%, just 25 bps above the latest level.
(Reporting by Choonsik Yoo and Jihoon Lee; Editing by Kim Coghill)
