SEOUL, Nov 8 (Reuters) - South Korea’s central bank told the parliament on Thursday that there was a case for monetary policy tightening to curb the fast growth in consumer and corporate borrowings, which has driven a property boom in certain areas.
“The opinion is being presented recently that some action is needed on the part of monetary policy to ease the financial imbalance amid the growing concerns about it,” the Bank of Korea said in its twice-yearly policy statement to the parliament.
It said financial imbalances were widening with household debt growing faster than income and corporate borrowing also growing fast in the real estate-related business sectors.
The central bank maintained a lukewarm assessment of the inflation, saying the government’s implementation of more welfare policy measures was responsible for low core inflation at a time of weak demand side pressure.
Local financial markets were pricing in a rate increase at the central bank’s Nov. 30 policy meeting, which would mark the first hike in a year, mainly to curb the property boom. (Reporting by Hayoung Choi; Editing by Choonsik Yoo and Sam Holmes)