BoK wary of weak job growth, uncertainties

SEOUL: South Korea’s economy may not be strong enough for an immediate interest rate increase due to weak job growth and other uncertainties, minutes from the Bank of Korea’s (BoK) August meeting released yesterday showed four board members saying.

“There is growing concerns about real growth, broadly, as job growth is sluggish when capital investment and construction investment are undergoing corrections,” one of the central bank’s seven board members said on Aug 31.

The BoK held its policy rate steady at 1.5% in August in a 6-1 vote, citing doubts about job market recovery and weak inflationary pressure.

Lee Il-houng, the sole August dissenter for a rate hike of the seven, said interest rates need to be raised to 1.75% as “financial imbalances are accumulating and as (the bank) needs to secure policy room at the same time”.

Only dissenters are identified in minutes.

Separately, the nation’s ruling party is not having any discussions in favour of higher policy interest rates to curb speculative borrowing in the housing market, two sources at the ruling Democratic Party told Reuters.

The independence of Bank of Korea board members is guaranteed by law, but they often face political pressure to adjust interest rates. — Reuters