Most BOK board members say monetary policy needs to remain restrictive (updated)

Taeyoung Engineering & Construction

30/01/2024 07:59

(Adds quotes and details from minutes in paragraphs 4-7)
       SEOUL, Jan 30 (Reuters) - 
    Five of the Bank of Korea's (BOK) six board members think
monetary policy needs to stay restrictive for some time to bring
inflation down to its 2% target as supply-side uncertainties
persist, minutes of the bank's Jan. 11 meeting showed on
Tuesday.
    The BOK held its benchmark rate  KROCRT=ECI  at 3.50% for an
eighth meeting in January and hinted it may pivot towards
monetary easing along with its global peers, an outcome
correctly forecast by all 38 economists polled by Reuters.
    "It is necessary to maintain a tightening stance until there
is confidence that inflation is settling at the target level,"
one of the six board members said.
    While overall inflation is cooling, measures stripping out
more volatile food and energy prices have come down more slowly
and policymakers pointed out upside from supply-side risks
persist amid a war in Ukraine. 
     South Korea's annual consumer inflation eased for a second
month in December to 3.25% and came in below market
expectations, backing policymakers' outlook that price pressures
will gradually ease through 2024.
    The consensus from analysts is that the BOK will start
cutting rates in the third quarter of this year, but as price
pressures soften, some are betting on an earlier start to policy
easing.
    One other board member said while the economy faces risks
from project financing loans going sour amid the debt crisis at
builder Taeyoung Engineering & Construction  009410.KS , any
jitters related to the sector need to be dealt with targeted
support measures outside monetary policies. 

 (Reporting by Cynthia Kim, Jihoon Lee; Editing by Christian
Schmollinger and Lincoln Feast.)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))