Korea’s central bank kept its key interest
rate steady at one-and-a-half percent for the eleventh consecutive month.
The decision comes amid mounting pressure on the Bank of Korea to lend a stronger hand
to the government’s corporate restructuring drive.
Our Shin Semin takes a closer look at the BOK’s May rate decision and the driving force
behind it. The Bank of Korea held its benchmark rate
steady at one-point-five percent,… a record-low for eleven straight months.
In its first monetary policy meeting with four new board members… the central bank
cited a modest uptick in global oil prices as reason to have more confidence, adding
that the current monetary policy is accommodative enough to support expansion. “Despite lingering uncertainties from in and
outside of the country, the BOK has taken into account the fact that the domestic economy
will moderately improve,… and it will monitor any economic changes coming its way.” Those changes will include the government-led
corporate restructuring process. The BOK faces mounting pressure to provide
more liquidity to two state-run banks burdened by debt from ailing shipping and shipbuilding
companies. The top central banker said that while the
BOK is closely cooperating with related authorities to facilitate the restructuring drive,…
measures should only be put into motion, if the central bank’s fiscal soundness can be
preserved. Experts say that caution is required… but
also essential is seeing the restructuring through. “The country’s potential of economic growth
largely depends on how the corporate restructuring goes. Industrial reforms will be based on
this, so it’s a significant and inevitable process that needs to be dealt with.” “Considering this, analysts say, given the
BOK’s determination to ensure it sees no losses in financing the restructuring drive, the
government should not rule out the option of a supplementary budget to provide more
firepower for the country’s floundering industries. Shin Se-min, Arirang News.”