SEOUL, May 8 (Reuters) - South Korea’s central bank needs to be wary of extremely low inflation, a bank board member said on Wednesday, adding that the bank is mandated to stabilise inflation near the target level.
“It is time to worry about the extremely low inflation, which has been far below the target level for a while,” Bank of Korea board member Cho Dong-chul told at a news conference in Seoul.
On Tuesday, the BOK released the minutes of its April 18 meeting, at which three board members said policymakers should be wary of low inflation.
Monetary policies aimed at ensuring financial stability could worsen the low policy rate environment, which could raise deflation risks, Cho told reporters on Wednesday.
The BOK has a target for inflation of 2 percent this year and next, but it has already lowered this year’s forecast to 1.1 percent from 1.4 percent projected in January.
The consumer price index rose 0.6 percent in April from a year earlier, Statistics Korea said, after slowing to a near three-year low of 0.4 percent in March.
The BOK kept its policy rate unchanged in April at 1.75 percent but cut its 2019 growth forecast further to a seven-year low, bolstering views that it may cut rates soon amid sagging exports and muted inflation.
Reporting by Joori Roh; Editing by Richard Borsuk