Gov't bank aid plan unlikely to trigger inflationary pressure: official

SEOUL, Oct. 21 (Yonhap) -- A government aid package to help local banks deal with a potential liquidity crunch is unlikely to exert inflationary pressure on the economy, a senior policymaker said Tuesday.

Vice Finance Minister Kim Dong-soo said the US$130 billion support plan aimed at
strengthening local banks' ability to cope with outstanding loans should not
cause trouble for the economy by increasing overall liquidity.
He said in a radio talk show that the sluggishness of the economy will make it
hard for the influx of funds to cause consumer prices to rise.
"The weak global economy is causing crude oil and natural resource prices to fall
off, and this trend is likely to be maintained in the near future," he said.
Kim pointed out that under such circumstances, there is little risk of inflation,
especially since domestic demand remains stagnant as people cut back on spending.
He said that Seoul's main concern is price hikes, caused in part by the
depreciation of the Korean won versus the U.S. dollar.
"Because such concerns exist, every effort will be made to keep tabs on any price
gains," he said.
On the "disappointing" results of the bank aid program on the market, the vice
minister claimed that more time is needed for the stock market and foreign
exchange market to be affected.
Despite the passage of the assistant package by the Cabinet earlier in the day,
the benchmark KOSPI lost ground, while the won fell against the greenback.