The minutes of the rate decision meeting held on Feb. 22 revealed that most Bank of Korea board members believed that it was too early to change monetary policy, as their priority continued to be stabilising prices. One member cautioned against premature expectations for a pivot, stating that it was too soon to discuss it due to high inflation expectations of 3%.
The board members preferred to respond to the negative impact of high interest rates by using micro measures, while considering factors such as household debt and housing prices for a policy pivot. According to the minutes, one member assessed that the risk from easing tightening had reduced somewhat, as inflationary pressures had weakened slightly due to sluggish domestic demand.
In the previous month, South Korea’s central bank kept interest rates at a 15-year high and joined its peers in the United States and Australia in seeking to temper investors’ aggressive rate cut expectations. During the meeting, one of the seven members suggested keeping the door open for a rate cut over the next three months.