Interest rate hike is 'not far away': BOK chief

(ATTN: ADDS more remarks in para 3, 8-10)
SEOUL, Feb. 17 (Yonhap) -- An interest rate hike by the South Korean central bank
is "not far away" because the private sector is again becoming self-sufficient,
the central bank chief said Wednesday.
"A rate hike should come when it is confirmed that the private segment is able to
walk on its own," Bank of Korea Gov. Lee Seong-tae told lawmakers in an
extraordinary session of the National Assembly. "I think (a rate increase) is not
far away".
He left open the possibility of another rate freeze, however, declining to
respond when asked whether the rate lift could come before his term ends in
March.
Lee also warned against the risks of rising inflation and asset bubbles in the
second half of 2010, hinting that there is a need to raise the rate.
Last week, the bank left its key interest rate at a record low of 2 percent for
the 12th consecutive month.
"(High inflation) is not an imminent problem now, but we have that possibility in
the latter half of the year," Lee said.
He estimated consumer prices could continue to grow in the last six months of
2010 after showing expansions of more than 2.5 percent in the first half.
Lee cited swelling household debts as the most overriding problem lurking in the
South Korean economy. The rock-bottom interest has fueled household demand for
credit, most of which made its way to the property market.
"Concerns over sovereign debts are growing, but household debts are more
problematic," he said.
The central banker also predicted the U.S. dollar to depreciate against other
global currencies over the long term.
"Overall, (the value of the U.S. dollar) will weaken in the medium to long term,
but over the short haul, it could temporarily strengthen more than expected
whenever financial concerns emerge."
pbr@yna.co.kr
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