(LEAD) BOK to consider growth in setting monetary policy direction after raising rates to ′restrictive′ level

▲ BOK Gov. Rhee Chang-yong speaks at a meeting with lawmakers on Feb. 21, 2023, to give a briefing on the central bank's monetary policy. (Yonhap)

(LEAD) BOK-monetary policy

(LEAD) BOK to consider growth in setting monetary policy direction after raising rates to 'restrictive' level

(ATTN: ADDS BOK chief's comments in last 3 paras, photo)

SEOUL, Feb. 21 (Yonhap) -- The Bank of Korea (BOK) has raised its interest rate to a "restrictive" level over the past few years and future monetary policy decisions will be made after closely analyzing not just inflation but also economic growth and other various factors, the central bank said Tuesday.

The BOK showed its broad monetary policy direction in a brief to lawmakers ahead of its rate-setting meeting scheduled for Thursday amid expectations that it could stand pat after raising the rate by 3 percentage points to 3.5 percent over the past 1 1/2 years to bring inflation under control.

"Following a 0.5 percentage-point increase in the benchmark interest rate in October of last year, there were also increases of a quarter percentage point in November and January," the BOK said.

"As the high inflation rate that greatly exceeds the target level continues, interest rates have been raised to a restrictive level to suppress the spread of inflation expectations and stem persistently high inflation," it added.

The BOK said it will still maintain its current restrictive monetary policy with a focus placed on inflation but consider various factors in making rate decisions, including the speed that prices go down, the impact of rate increases on growth and monetary policy changes in major countries.

BOK Gov. Rhee Chang-yong told lawmakers that there is a need for a "delicate" approach in carrying out monetary policy going forward as uncertainty remains high at home and abroad.

He also emphasized the importance of close coordination with the government to tackle any unexpected market situations.

"In the case that unexpected financial and foreign exchange market instability recurs, we will respond in a timely manner through close policy coordination with the government and supervisory authorities, as we did last year," he said.

(END)