BOK chief urges caution in tackling price pressures

SEOUL, Oct. 20 (Yonhap) -- The chief of the Bank of Korea (BOK) urged central
banks around the globe Monday to be cautious in tackling inflation pressure as
financial market jitters are feared to slow economic growth.
"We need to be cautious in coping with price pressures," Lee Song-tae, the
governor of South Korea's central bank, said in a release. "This is because the
downside risks to growth increase while the upside risks to prices dwindles, as
the financial market turmoil has an ever greater impact on the real economy."
Lee added that shaping a preemptive monetary policy that takes into account
mid-and long-term macroeconomic trends is becoming increasingly difficult, as
uncertainty is mounting about economic situations at home and abroad.
The BOK slashed its key interest rate to 5 percent from 5.25 percent on Oct. 9 in
a concerted effort to soothe global financial turmoil and stem the drastic
slowdown of the local economy. It was the bank's first cut since November 2004,
marking the end of three years of monetary tightening.
Lee left open the possibility of additional rate cuts, saying that it is possible
there will be interest rate changes later.
He said the economic growth rate could fall further in the fourth quarter and in
the first half of 2009. In July, the BOK said the economy is likely to grow 3.9
percent in the second half.