By Cynthia Kim
SEOUL (Reuters) -Most of the Bank of Korea’s board members expressed concern about growing price pressures and even the most dovish member said it was time to discuss tightening policies, minutes from the central bank’s November meeting showed on Tuesday.
The central bank is already in a policy tightening cycle and the minutes suggest further tightening in 2022.
On Nov 25, the BOK raised interest rates for the second time to 1.00% since the COVID-19 pandemic began and revised up its inflation outlook as concerns about rising household debt and consumer prices grew.
Joo Sang-yong, the only dissenter to that decision in the seven member board, said he sees a stronger recovery in the job market and meaningful improvement in household income, which deserves discussion about tighter monetary policy.
“..the recovery in employment, household income and private consumption indicates there is improvement in domestic demand and such are meaningful changes that deserves discussion about changing course in monetary policies,” Joo said on Nov. 25.
A majority of the board members agreed that the recovery trajectory in Asia’s fourth largest economy remains intact even amid a resurgence in COVID-19, while price pressures could remain strong for the time being.
The central bank is expected to continue its policy tightening cycle with rates tipped to reach 1.50% by the end of 2022, raising concerns about whether households will be able to service their debt repayments.
The BOK in November raised its inflation outlook for next year to 2.0% from 1.5% previously, suggesting the need for further rate hikes amid concerns about faster and more protracted price pressures.
The bank sees the economy growing 4% this year and 3% in 2022, as projected in August.
(Reporting by Cynthia Kim; Editing by Tom Hogue and Michael Perry)
