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BOK board members express concerns over economic slowdown: minutes

All News 17:04 September 17, 2019

By Byun Duk-kun

SEOUL, Sept. 17 (Yonhap) -- Several members of the Bank of Korea's (BOK's) monetary policy board have voiced concerns over the country's slowing economic growth, minutes of the board's latest meeting released Tuesday showed, possibly hinting at an additional rate cut in the offing.

In its rate-setting meeting, held Aug. 30, the seven-member monetary policy board voted 5-2 to keep the policy rate frozen at 1.5 percent.

According to the minutes, one board member called for an immediate rate reduction to help boost domestic consumption.

"Especially, local and external conditions have continued to turn for the worse since the last rate-setting meeting (held July). The downside risk for our economy continues to expand as not only the U.S.-China trade dispute and the country's own trade tension with Japan are growing, but concerns for the U.S. economy are also surfacing," the board member said, according to the released minutes.

The other board member who voted in favor of a rate cut insisted the economic conditions were deteriorating at a faster rate than earlier anticipated.

"When we look at the real side of our economy, internal and external conditions appear to have become worse than anticipated since the July meeting," the board member said.

"The drop in the country's exports is apparently expanding as the global economic conditions continue to deteriorate for a longer period of time than earlier expected," the second board member said.

South Korea's exports have dropped for nine consecutive months since December, plunging 13.6 percent on-year in August.

Only the two had called for a rate reduction in August, but others also hinted at the need for a possible rate cut further down the road.

"The slowdown in the growth of the global economy may be inevitable due to shrinking trade and investment ... Under such conditions, monetary and fiscal policies will have to remain in an expansionary mode to minimize the negative impact from external shocks," a board member said.

The August meeting was held about a month after the central bank revised down its growth outlook for the local economy to 2.2 percent from 2.5 percent forecast in April.

Some board members expressed concerns that the country may even fail to meet the 2.2 percent growth target.

"One board member said the country's internal and external conditions have rather deteriorated since the policy rate cut in July due to the escalation of the U.S.-China trade dispute, start of Japan's export restrictions, protest rallies in Hong Kong and growing concerns of a no-deal Brexit, which greatly increased the uncertainties facing our economy," the BOK said.

The BOK board is scheduled to hold its next rate-setting meeting on Oct. 16.


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