Finance minister views interest rate hike as premature

SEOUL, Sept. 14 (Yonhap) -- South Korea's finance minister said Monday it is
premature to raise the nation's key interest rate, suggesting he remains cautious
about rolling back stimulus measures that the government and central bank had
introduced over the past year to bolster the slumping economy.
When asked if it is "premature" to talk about a rate hike under the current
global situation during a meeting with lawmakers, Finance Minister Yoon
Jeung-hyun said, "Yes, it is," adding that central bank officials are expected to
make a "wise" decision on the monetary action.
His comments came as the Bank of Korea kept its key interest rate unchanged last
Thursday at a record low of 2 percent for a seventh month, but hinted it would
conduct a rate hike if housing prices continue their upward trend.
Debate is brewing over how and when to absorb possible excess liquidity unleashed
in the process of stimulating consumption, job creation and corporate investment
since the financial crisis started last September.
"It is tough to forecast when it's the right timing for such a move," Yoon said.
"Still, we should be well prepared for global cooperation in case the world's
leaders from the Group of 20 countries discuss the issue in a summit to be held
later this month in Pittsburgh."
Yoon had said that the government will stick to "expansionary" macroeconomic
measures until the private sector is capable of growing on its own.
South Korea's economy grew 2.6 percent during the second quarter from three
months earlier, a stark contrast with a 5.1 percent plunge in the final quarter
of 2008. The government expects the economy to shrink 1.5 percent for this year.
Touching on the government's tax policy, meanwhile, Yoon said he is supportive of
cutting corporate taxes, saying it is a "global trend" to reduce the tax burden
on companies.
(END)