[Photo by Lee Seung-hwan]
South Korea’s central bank will keep monetary policy accommodative in aiding the economy, Bank of Korea (BOK) governor Lee Ju-yeol reiterated, shrugging off market bets of a tightening down the road in reflection of rising market yields and recovery in economy.
“The Korean economy has been showing a moderate recovery thanks to exports, but uncertainties still remain high due to the virus spread,” Lee told a National Assembly meeting hearing on Tuesday.
The remark came ahead of the central bank’s monetary policy meeting on Thursday. The BOK has stayed pat on its rate since last cut to a historic low of 0.50 percent in May last year at the height of the pandemic. Inaction is largely expected at the upcoming meeting.
The benchmark three-year government bond has lately been yielding 50 basis higher than the policy rate at 1.018 percent and the longer-dated papers hovering around 2.0 percent.
In a written report to the National Assembly, the central bank said that the headline economy is recovering, with mixed performance across the sector.
While exports are rising on the back of trade recovery and businesses begin to normalize their capital expenditures, consumption still remains weak due to the extended social distancing measures aimed at keeping the virus spread in check. The service industry continues to shed workers amid industry slowdown.
The BOK predicted that recovery in jobs will likely take time as the service industry remains in the doldrums.
Global economy is also losing its recovery momentum due to the resurgence of the virus infections and repeated lockdowns throughout the world, the central bank found.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]