SEOUL, Sept 12 (Reuters) - South Korea’s central bank needs to ensure that inflation moves towards its target level before raising policy interest rates, a Bank of Korea (BOK) board member said, putting a dampener on expectations for further monetary tightening in the coming months.
“Taking pre-emptive (policy) steps would be dangerous under current inflation path,” Shin In-seok, one of the BOK’s seven members at the Monetary Policy Board said in a press conference in Seoul on Wednesday.
“Any adjustments in policy rates should be carried out with confirmation that inflation is picking up.”
Shin’s remarks could potentially hose down expectations of further near-term policy tightening as headline inflation has stayed below the central bank’s target of 2 percent since October 2017.
The BOK held its policy rate steady at 1.50 percent in a 6-1 vote at the end of last month, citing doubts about job market recovery and weak inflationary pressure.
In an Aug. 29 Reuters survey, 11 of 19 economists expected the central bank to raise interest rates before the end of this year.
The BOK joined its major peers in November by raising interest rates for the first time in more than six years, yet it has tempered market expectations for more amid the feeble inflation.
Reporting by Cynthia Kim; Editing by Shri Navaratnam