* Bond, stock inflows to continue for 3rd straight month in
* BOK chief says current rates accommodative enough
(Adds governor comments)
By Christine Kim
SEOUL, March 30 South Korea's central bank said
on Thursday the country's stocks and bonds are set to see net
inflows for a third straight month, quelling concerns over a
possible selloff in the wake of the U.S. Federal Reserve rate
hike earlier this month.
As of March 24, foreigners had bought a net 3.4 trillion won
($3.05 billion) worth of South Korean shares while they boosted
their holdings of bonds by 1.1 trillion won, the Bank of Korea
"Rate hikes by the U.S. Federal Reserve have the potential
to lend hardship to our economy, but if they are carried out
gradually the impact is not expected to be large," the BOK said
in a report to parliament.
But if the Fed's actions were to cause financial jitters in
other emerging market economies, risks could rise and add to
outflow pressure, the BOK said.
The central bank report reiterated its view that South
Korea's economy would grow in the mid-2 percent range this year,
but added there were many uncertainties.
Inflation would be around 2 percent, the bank said, roughly
in line with its target.
Noting sluggish economic growth and mild inflationary
pressure, the BOK said it would maintain its accommodative
monetary policy stance.
When asked by a lawmaker if the central bank is considering
quantitative easing, Governor Lee Ju-yeol said the current
situation does not warrant such a policy.
"Right now when we look at our financial situation, credit
flows and lending, it's all sufficient enough to boost the
economy," said Lee to lawmakers in parliament.
"Real interest rates are at accommodative levels and
currently it is not time to consider quantitative easing like
some advanced economies have done."
The Bank of Kore has cut its policy rate to a record low of
1.25 percent over the past few years, but has kept it steady
A majority of analysts see the bank standing pat until year
end or longer before it starts tightening as household debt
keeps accumulating at a swift pace while inflation has started
to creep up.
The central bank's next rate-setting meeting will be held on
($1 = 1,113.6700 won)
(Reporting by Christine Kim; Additional reporting by Cynthia
Kim; Editing by Eric Meijer)