Bank of Korea's Rhee: premature to talk about pivot
INCHEON, South Korea :South Korea's central bank chief welcomed an easing in inflation but said it was"a little bit premature" to suggest it will start to cut rates as early as this year given that inflation is still above its policy target.
Bank of Korea Governor Rhee Chang-yong also said during an interview with CNBC TV that the pressure on the won currency from U.S. monetary policy tightening was now expected to soften in step with the slowing pace of rate hikes there. South Korea's central bank started raising interest rates ahead of its peers in August 2021 and increased the policy rate by 300 basis points from a record low of 0.50 per cent. Rhee said it was the"right time to assess the accumulated effect".
The Bank of Korea held interest rates steady at the last two meetings. It next reviews policy on May 25. The BOK has an official annual inflation target of around 2 per cent. On the won's weakness, Rhee said a currency swap with the U.S. Federal Reserve was not the appropriate option at present as the currency's weakness was related to the differences in interest rate policies between the two countries.
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