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Bank of Korea board member says monetary policy could diverge from US if needed

[SEOUL] A board member of South Korea's central bank said on Wednesday that stability of the price level should be at the heart of the bank's policy decisions even if it meant diverging from US interest rates - which appear set to increase steadily.

Bank of Korea board member Cho Dong Chul said in doing so, interest rate decisions should focus on local economic conditions, and not on the US Federal Reserve's policies.

"There are sufficient grounds to believe that our monetary policy could proceed in a different manner from the direction where the United States is going," Mr Cho said, reiterating the bank's earlier stance that the BOK won't be raising interest rates just because the US is doing so.

Mr Cho's comments come as policymakers debate whether an easing cycle that began in 2012 should end as the Federal Reserve is set on a course of monetary tightening.

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Currently, the prevailing dominant view among analysts is that the BOK will remain in wait-and-see mode amid uncertainties including the upcoming South Korean presidential election and increases in US interest rates.

The BOK last lowered its policy rate in June 2016 and has kept it at 1.25 per cent since then.

Its inflation target is two per cent, while the benchmark consumer price index was at 1.9 per cent in February.