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BOK chief to keep monetary easing policy

All Headlines 16:23 January 02, 2017

SEOUL, Jan. 2 (Yonhap) -- The head of South Korea's central bank pledged Monday to maintain the current monetary easing policy to support growth amid uncertainties at home and abroad.

The Bank of Korea (BOK) has kept its key rate at an all-time low of 1.25 percent since June when it made a surprise rate cut to bolster Asia's fourth-biggest economy.

"It seems appropriate to maintain the monetary easing policy for a considerable period of time," BOK Governor Lee Ju-yeol said in a New Year speech at the bank's headquarters in Seoul. He also said the central bank will focus on stabilizing the financial market.

BOK chief to keep monetary easing policy - 1

Still, Lee remained cautious on the possibility that U.S. interest rates could exceed South Korea's in case of additional U.S. rate hikes, saying "it is hard to predict whether a reverse in the interest rate gap will have an impact" on the South Korean economy or not.

In December, the U.S. Federal Reserve raised its key interest rate by a quarter of a percentage point to a range of 0.5 percent to 0.75 percent. It also signaled three rate hikes in 2017.

Lee said the BOK will make a decision on its monetary policy by taking into account market situations. He has said that the U.S. rate increase does not necessarily mean the BOK will immediately raise its interest rates.

Also Monday, Finance Minister Yoo Il-ho called on officials to concentrate all resources on risk management and economic recovery, noting that South Korea's economy is at a crossroads of overcoming difficulties and moving forward or losing steam.

Yoo said the economy could face challenges over a possible shift in the U.S. trade policy and internal and external uncertainties.

"We should pursue economic policy without being shaken, though we are going through a politically unstable period," Yoo said, in an apparent reference to the parliamentary impeachment of President Park Geun-hye over a corruption scandal involving her confidante.

The Constitutional Court is set to determine whether to uphold or overturn the impeachment by early June. If Park is officially ousted, the country has to hold a presidential election within two months.

entropy@yna.co.kr
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