SEOUL (Reuters) – Members of the board of Korea’s central bank said it should carefully monitor the Ukraine crisis and the impact on commodity prices before hiking interest rates from 1.25% now, the minutes of a Feb. 24 meeting showed on Thursday.
The Bank of Korea kept interest rates steady at 1.25% on Feb. 24 but significantly raised inflation forecasts and signalled a quicker pace of tightening might be needed if price pressures build further due to the Ukraine crisis.
“The most important factor to look at in the future is the inflation-related variables but it is necessary to carefully look at the development of global risks due to the uncertainty in the asset market caused by changes in monetary policies of major countries and the development of global risks surrounding the Ukraine crisis,” said one of the policymakers on the board.
With Governor Lee Ju-yeol’s term set to end on March 31, his successor is likely to need to take interest rates higher so as to stem inflation in the recovering economy, in line with other major central banks that are rushing to normalise rates.
(Reporting by Cynthia Kim)
