S Korea's central bank chief hints at further rate hike

16:07, August 17, 2010      

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South Korea's central bank chief on Tuesday hinted at a need to further raise the nation's key interest rate, calling the current monetary policy stance "highly accommodative."

"Despite the hike in the policy rate, the current monetary policy stance is still deemed highly accommodative, given the situation of the real economy in terms such as the potential growth and inflation rates,"Bank of Korea (BOK) Governor Kim Choong-soo said in a business forum held in Seoul.

"Although the policy rate has been adjusted upward, the scale of the increase in interest rates was not very large,"said Kim, adding that it is likely to have only a limited impact on the financial and housing markets and on the household and corporate sectors.

The remarks came after the BOK's monthly rate setting meeting late last week as a result of which the key rate was decided to stay frozen at the current level of 2.25 percent.

Upon the rate freeze, the BOK cited lingering concerns in the global economy, including the slowing U.S. economy.

The BOK in its July rate setting meeting abruptly revised up the rate by 0.25 percentage point from a record low 2 percent that has been kept for 16th straight months.



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