SEOUL, KOREA - The Bank of Korea's Monetary Policy Committee said on May 9 it would work to improve the policy effectiveness by working with the government. The committee said, "We will work to lower inflation expectations by looking carefully into the effects of the revised supplementary budget and other government economic policy measures, as well as the rate cut this time." "We will make sure the growth potential wouldn't be harmed due to the continuing low-growth pace," the committee added.
The policy direction that the Monetary Policy Committee would take into account the effectiveness of the government's economic policy measures is a sea change from a month ago when the governor dismissed such suggestions.
As for price level, the Monetary Policy Committee sees it would maintain a low level for the time being. The consumer prices in the month of April rose 1.2 percent, slightly lower than the previous month's 1.3 percent. The core inflation rate not including the prices of farm goods and petroleum products in April has declined to 1.4 percent from 1.5 percent in March.
The committee said, "As long as there is nothing special going on in the supply side, the price level would be at a low level." This stance has also changed from last month's cautionary position that there are ample possibilities of price rise.
Earlier in the morning on the 9th, the Monetary Policy Committee cut the benchmark base money rate to 2.50 percent from 2.75 percent. The interest rate has been reduced three times since last July by 25 basis points each.
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