SEOUL, Nov 3 (Reuters) - South Korean monetary policy had to be maintained to support a weak economic recovery, members of the board of its central bank agreed at a meeting on Oct. 14, the minutes showed on Tuesday, while flagging the need to stay wary of rising household debt.
The majority of members said Asia’s fourth-largest economy was showing signs of a weak recovery, with improvements in domestic demand and exports, while adding that the coronavirus pandemic led to high uncertainty over the future path of growth.
“It is necessary to maintain the monetary policy accommodative to buffer the economy’s excessive contraction and speed up recovery,” said one of the seven-member board, which voted unanimously to keep its seven-day repurchase rate at 0.50%.
“But the continuous rising of household debt is a concern,” the board member added.
None of the board urged any immediate policy action, but one member said further easing should be avoided, given “the recent pick up in demand due to easing of social distancing measures, concerns over outflow of foreign bond investment and increased leverage in the economy”.
Another said the bank “needs to review the effectiveness of policies other than interest rate and should prepare for using unconventional measures,” given the limited effect of the rate-focused monetary policy.
Separately, another member said policymakers should keep reviewing the targeted approach to support those hit hardest by the pandemic while retaining the unchanged rate.
Only dissenters are identified in the minutes. (Reporting by Joori Roh; Editing by Clarence Fernandez)
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