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BOK chief vows soft monetary policy to bolster virus-hit economy

Finance 10:30 October 16, 2020

SEOUL, Oct. 16 (Yonhap) -- The Bank of Korea (BOK) will maintain a soft monetary policy to bolster the recovery of the South Korean economy hit by the coronavirus pandemic, the top central banker said Friday.

"The BOK will keep its monetary policy accommodative to help the domestic economy bounce back," BOK Gov. Lee Ju-yeol said at the start of an annual parliamentary audit of the central bank.

In the process, the BOK will keep close tabs on the impact of the coronavirus pandemic on the economies and financial markets at home and abroad, as well as the effect of policy measures to counter the disease, Lee said.

Lee's comments came two days after the central bank froze its key interest rate at a record low of 0.5 percent amid heightened economic uncertainties due to the protracted coronavirus outbreak and rising housing prices.

Bank of Korea Gov. Lee Ju-yeol (R) speaks during a parliamentary committee meeting at the National Assembly Building in Seoul on Aug. 24, 2020. (Yonhap)

October marked the third straight month of a key rate freeze. In August, the BOK froze the key rate, citing the fallout of a flare-up in new coronavirus cases. In July, the bank left the rate unchanged as well.

The BOK chief said that despite a slight recovery in exports, Asia's fourth-largest economy remains faced with great uncertainties due to the resurgence of coronavirus cases from mid-August.

In August, the central bank its 2020 growth outlook to a sharper-than-expected contraction of 1.3 percent, citing the impact of a resurgence in virus cases. The South Korean economy shrank 3.2 percent in the second quarter from three months earlier after contracting 1.3 percent on-quarter in the January-March period.

Lee also said the BOK will closely monitor such changes as the flow of funds in asset markets and an upturn in household debt, while making concerted efforts to stabilize the financial markets and keep the country's credit flow smooth.

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