Bank of Korea (BOK) Governor Kim
Choong-soo said Thursday that the central bank is now staying at an
expansionary policy mode amid lingering external uncertainties.
"I think the monetary policy stance is now expansionary, rather than tightening," Kim told reporters after the February rate- setting meeting though the BOK decided to freeze the base rate. " The rate cut alone does not necessarily mean a monetary easing."
Kim noted that there remained external uncertainties such as the fiscal problems in advanced economies and the issue of foreign exchange rates.
The governor, however, said that those downside risks to the economy are not being assessed to be materialized.
The BOK kept its seven-day repurchase rate on hold at 2.75 percent at the February rate-setting meeting. The bank reduced borrowing costs by 25 basis points in July and October last year each.
Kim mentioned the significance of coordination of monetary policy among global central banks, indicating that South Korea's expansionary policy stance would last for the time being under the crisis situation.
Regarding the further rate cut timing, Kim reiterated that monetary policy will be effective when it comes with fiscal policy, hinting that more expansionary policy could be made after the new fiscal stimulus comes out.
The new administration under President-elect Park Geun-hye was widely forecast to unveil new stimulus measures to boost the economy in the early period of new presidency. The government will take office on Feb. 25.
"Policy mix means (monetary and fiscal) policies should go in the same direction and should be in harmony," said Kim. "It needs to pay much attention to the policy mix."
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