BOK to gradually raise interest rate in line with economic conditions

SEOUL, Feb. 16 (Yonhap) -- South Korea's central bank will gradually raise its
policy interest rate after gauging financial and economic improvements at home
and abroad, the bank said Tuesday.

The Bank of Korea (BOK) will "be watchful of the possibility of economic
imbalances resulting from maintaining eased monetary policies for an extended
period of time," the bank said in a report to be submitted to the provisional
session of the National Assembly.
The BOK will also reduce low-cost loans provided to local commercial banks that
lend to small and mid-sized firms as part of the BOK's efforts to roll back extra
liquidity released to fight the global financial crisis, according to the report.

For now, however, the BOK will maintain an expansionary monetary stance to cement
the recovery trend and head off uncertainties in the country's economic growth,
the bank added.
The BOK report came after the bank froze its benchmark seven-day repurchase rate
at a record-low 2 percent for a 12th straight month on Thursday.
Fiscal deficit concerns in the euro zone and China's moves to tighten credit
raised uncertainties over the local economy, which emerged as one of the world's
fastest to rebound from its worst downturn in a decade.
The January unemployment rate of 5 percent, the highest since 2001, was also
cited as a reason for the BOK keeping the key interest rate untouched.
pbr@yna.co.kr
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