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Monetary policy cannot be solely focused on real estate market: BOK

2018/09/14 09:20

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SEOUL, Sept. 14 (Yonhap) -- Monetary policy can play a crucial role in stabilizing housing prices, but changes in interest rates cannot simply seek to meet one goal, the vice chief of South Korea's central bank said.

The comments were made by Yoon Myun-Shik, senior deputy governor of the Bank of Korea (BOK), in response to recent calls for a rate hike to curb soaring housing prices. Critics have said the central bank's low rate policy and the subsequent excessive liquidity caused the real estate market to become overheated.

In Seoul, housing prices posted their fastest gain in a decade. For the 12 months until July, the average price of apartments in the capital city jumped 6.76 percent.

"The recent spike in the property market is not due to ample liquidity but complex factors including supply-demand imbalance and the government's development plans," Yoon said.

While noting that the central bank "has been closely watching the market and has had discussions with grave concern," the deputy governor said the benchmark rate "cannot be adjusted solely to stabilize the housing market."

   He also stressed that the rate decision has been and will be made "in an independent and neutral fashion," though the bank has "carefully listened to diverse opinions."

   The remarks came after Prime Minister Lee Nak-yon said on Thursday during a parliamentary interpellation session that it's time to consider raising interest rates to prevent capital flight and other problems.

In August, the BOK decided to freeze its policy rate at 1.5 percent, leaving it unchanged since November last year, citing sluggish economy data and low inflation pressure.

BOK Senior Deputy Governor Yoon Myun-Shik (Yonhap) BOK Senior Deputy Governor Yoon Myun-Shik (Yonhap)

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