SEOUL, May 4 (Yonhap) — Members of the central bank’s rate-setting board see growing inflationary pressure amid economic recovery but assess that it is too early to discuss normalizing accommodative monetary steps, minutes from the latest policy meeting showed Tuesday.
In the rate-setting meeting on April 15, the seven-member board unanimously voted to keep the policy rate at a record low of 0.5 percent to underpin an economic recovery from the pandemic.
According to the minutes, inflation expectations may pick up down the road as Asia’s fourth-largest economy is on a recovery track, but economic uncertainty still lingers.
“Currently, the economy is still at the early stage of recovery. It is too early to start discussing normalization of monetary policy based on concerns about inflation,” a board member said.
Another member said despite growing upbeat data, uncertainty persists from the speed of the vaccine rollout and a flare-up in COVID-19 cases.
South Korea’s consumer prices grew 2.3 percent on-year in April, the fastest gain since August 2017, according to the statistics agency.
Policymakers said consumer inflation is expected to accelerate in the second quarter due largely to a low base effect and rising prices of farm and oil products.
But they said the annual inflation is not likely to exceed the BOK’s inflation target of 2 percent over the medium term.
The BOK earlier said the growth of the consumer inflation may exceed its earlier forecast of 1.3 percent amid an economic recovery.