South Korea central bank chief says small, open economies should maintain easy policy

[SEOUL] Small, open economies like South Korea should maintain accommodative monetary policies to escape the current trend of low growth seen globally, the nation's central bank chief said on Tuesday.

"We should maintain our accommodative monetary policy stances to ensure that the trend of low growth does not become entrenched," said Bank of Korea's Lee Ju Yeol in a speech at an international conference hosted by the central bank in Seoul.

"Yet at the same time, we must ensure that this does not undermine financial stability." Mr Lee also cautioned against excessive monetary easing in small, open economies because of the higher risks of sudden capital outflows and currency depreciation.

Last week, the BOK kept interest rates unchanged at 1.25 per cent after cutting them in a surprise move in June, with governor Lee indicating future policy moves will be data-dependent.

A majority of analysts see South Korea's central bank cutting at least once more this year to support Asia's fourth-largest economy as it carries out an overhaul of its massive shipping and shipbuilding sectors.

REUTERS