S. Korea can't take rate rise: minister
By Kelly Olsen |
March 9, 2010, Tuesday
|
Print Edition
Print Edition
SOUTH Korea's finance minister yesterday warned that the country's economic recovery remains too fragile to withstand an increase in borrowing costs from a record low, cautioning the central bank just days ahead of a rate-setting policy meeting.
"It is the view of the Korean government that we do not believe it is the right time to raise rates yet," said Minister of Strategy and Finance Yoon Jeung-hyun.
Yoon, speaking to journalists from foreign media organizations, cited worries over what he called the "self sustainability" of the country's private sector, a spike in unemployment and "significant" household debt levels.
The South Korean government has repeatedly expressed concerns about the risks of a too-early exit by the Bank of Korea from a series of rate cuts from late 2008 that have lowered borrowing costs to a record low of 2 percent.
In January, the Ministry of Strategy and Finance exercised its right to sit in on a central bank policy meeting for the first time in a decade, sending a top official as an observer.
The ministry said at the time that it respects the bank's independence but emphasized "the need for policy coordination between the government and central bank during times of economic crisis."
The bank has left the rate unchanged since March 2009 as the economy stabilized and recovered.
South Korea's economic growth slowed in the fourth quarter of 2009 on weakness in manufacturing, construction and exports.
"It is the view of the Korean government that we do not believe it is the right time to raise rates yet," said Minister of Strategy and Finance Yoon Jeung-hyun.
Yoon, speaking to journalists from foreign media organizations, cited worries over what he called the "self sustainability" of the country's private sector, a spike in unemployment and "significant" household debt levels.
The South Korean government has repeatedly expressed concerns about the risks of a too-early exit by the Bank of Korea from a series of rate cuts from late 2008 that have lowered borrowing costs to a record low of 2 percent.
In January, the Ministry of Strategy and Finance exercised its right to sit in on a central bank policy meeting for the first time in a decade, sending a top official as an observer.
The ministry said at the time that it respects the bank's independence but emphasized "the need for policy coordination between the government and central bank during times of economic crisis."
The bank has left the rate unchanged since March 2009 as the economy stabilized and recovered.
South Korea's economic growth slowed in the fourth quarter of 2009 on weakness in manufacturing, construction and exports.
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