Bank of Korea minutes show board divided over inflation-growth priorities

SEOUL: Two of the Bank of Korea's seven board members said the pace of interest rate hikes needs to be moderated to factor in the impact on economic growth, while the majority urged prioritising inflation control, October meeting minutes showed on Tuesday (Nov 1).

The central bank raised its benchmark policy rate by 50 basis points to 3 per cent on Oct 12, as expected, bringing the total increase since August last year to 250 basis points.

"It seems (South Korea) no longer needs to be wary of excessive inflationary pressure as the supply shortage problem caused by disruptions in the global supply chain is gradually being eased," one of the two board members who dissented and called for a 25 basis point hike in October said.

Such a view sharply contrasts with those of the majority of board members who still see managing inflation as the top priority, suggesting the central bank will need to fight rising prices with tighter policy without crashing the economy.

The median forecast in a Reuters October poll showed the BOK's base rate going to 3.25 per cent by year-end and then peaking at 3.50 per cent in the first quarter of 2023.

The central bank next reviews policy rates on Nov 24.