One policymaker opposes March rate freeze: minutes

SEOUL, April 28 (Yonhap) -- One policymaker at the Bank of Korea (BOK) voted
against a freeze on its key interest rate in March, voicing the need for a cut to
bolster the plunging economy, according to the central bank's minutes released
Tuesday.
In a rate-setting meeting on March 12, the BOK's monetary policy committee
decided to leave the benchmark seven-day repo rate unchanged at a record low of 2
percent, after six consecutive rate cuts, in a bid to leave room to brace for a
deeper economic downturn.
But according to the minutes, only one member, Kang Myung-hun, argued that the
BOK needs to cut the rate by 0.25 percentage point to 1.75 percent.
"A rate reduction seems to be inevitable to give a consistent signal to the
market that the central bank is aggressively and preemptively tackling the
slumping economy," Kang was quoted as saying, adding that the BOK needs to
closely monitor the corporate funding situation and to prepare for quantitative
easing steps.
In April, the BOK froze the key rate for the second straight month, saying that a
sharp decline in economic activity has moderated.
The South Korean economy grew 0.1 percent in the first quarter from three months
earlier mainly due to the government's fiscal spending, nearly averting a
much-feared recession or two straight quarters of contraction. Asia's
fourth-largest economy shrank 5.1 percent for the fourth quarter of last year.
The BOK predicted that the local economy will shrink 2.4 percent this year, the
worst performance in more than a decade. The economy may hit bottom in the second
or third quarter, but it is expected to recover very slowly due to uncertainty
about the global recession, it added. The next review is slated for May 12.
sooyeon@yna.co.kr
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