No need for South Korean central bank to tighten policy further, says deputy governor

THERE is no need for the South Korean central bank to tighten monetary policy further for now, despite the prospect of interest rates staying higher for longer in the United States, the senior deputy governor said.

“When there is an interest rate gap with the United States, it affects several factors from market prices to foreign capital flows. So far, it seems to have been well absorbed,” said Ryoo Sang-dai, senior deputy governor of the Bank of Korea.

In a media pool report released on Friday (Oct 6), Ryoo was quoted as saying that heightened market volatility earlier in the week was a temporary reaction to accumulated issues over a long holiday period, and it was unlikely to continue.

Still, the central bank will continue to watch for any domestic market impact from interest rates potentially staying higher for longer in the United States and take stabilising measures if needed, Ryoo said.

On an issue that has been a major concern for policymakers, the voting member of the monetary policy board said growing household debt would likely soften the pace of growth in the third quarter. REUTERS